Suppose you are given the following Bid Rent Functions for three competing land uses â Urban (including buildings, roads, parks, etc.), Agricultural, and Wilderness use respectively:
BRurban = 1000 â 50M (1)BRag = 600â15M (2)BRwild = 400 â 8M (3)
where BR â¡ bid rent function and M â¡ miles from city center.
a) At how many miles from the city center will land use be converted from urban to agri-
cultural use? Interpret your answer.
b) At how many miles from the city center will land use be converted from agricultural to wilderness use? Interpret your answer.
c) What happens to conversion distances if wilderness becomes $100 more valuable at every distance?
Suppose you are given the following functions describing the relationship between Effort, Cost, and Revenue in a fishery:
TR = 8Eâ0.01E2 (4)
TC = 2E (5)MR = 8â0.02E (6)MC = 2 (7)
a) Calculate the efficient level of effort (Ee), the level of effort associated with maximum sustainable yield (Em), and the level of effort associated with open-access property rights (Ec).
b) What happens to Ee, Em, and Ec if total cost increases to TC = 3E and marginal cost increases to MC = 3?