Question

Please explain.

Suppose that landowners have the power to restrict X the distance to the edge of the city, in order to increase the land rent they earn. Suppose that, with no restriction, the urban land rennt funtion is given bv r 100 x, where x 1s the distan ın blocks to the CBD. Suppose that agricultural land rent r、Is equal to 20 The city edge X is 8o Now suppose that landowners can restrict X to a value ot 50 blocks. When they impose this restriction, the uban land rent curve shifts up, with the new rent function given byr- 05-х.Remember, the 1 est d ed 111 an areas become a rural place again hele ıs a loss b changing it back to 1 111 al areas, which Is he red par 111 the graph. However, the gain 1s got by increasing the rent from r 0 to r1, which is blue areas in the graplh. 0 The new X is The loss area is and the gain area is There is a net (loss/gain) by this restriction, which is

Answer 1