Question

1. Let’s apply the economic model of land allocation:Assume that a fixed amount of land can be used for (i) residential development, (ii)agriculture and (iii)wilderness. In the case of residential development, B+2D=10 gives the relationship between net benefit per acre, B and distance to the center of the town, D. The last two equations 8B + 5D = 40 and 10B + 3D = 30 give the same relationship in the case of agriculture and wilderness, respectively. To find the allocation that maximizes the net benefits society receives from the land, find how far from the center of the town is the land allocated to residential development, agriculture and wilderness. Hint: I would first draw the three lines on a graph. Given three equations and three unknowns, I would then solve for respective points of intersection that would give distance from center of the town.

Answer 1