Question

1. The agricultural community of Rupertville is known for growing strawberries, lettuce and wheat. All of the agricultural products that are grown must be brought to the market in the city center. The table below provides the yield per acre, price per ton, cost per ton, and transport rate per ton of output.

Crop	Yield / acre	Price / ton	Cost / ton	Transport rate per     ton per mile
Strawberries	3 tons	30	22	0.5
Wheat	4 tons	10	8	0.08
Lettuce	2 tons	25	18	0.3

1. Generate the bid-rent function (profit function) for each of the three crops as a function of the distance (d) from the city center.
2. Plot all three bid-rent functions on the same graph (where the profit is on the y-axis and the distance is on the x-axis). If the assumption is made that land will always be rented out to the highest bidder, what is the range of distance from the city center over which each crop will be grown? Illustrate this explicitly on your graph.
3. How low would the transportation rate for strawberries have to be before it is the only crop grown in the town?
4. Suppose that due to an increase in demand, the price of each crop increases by 50%. How will this influence the extent of agriculturally cultivated land in the town? In other words, after the change what is the distance over which agricultural production will occur? (1 point)

Answer 1