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Von Thunen model

Using the Von Thunen model to answer questions on agricultural land use.

Agricultural Land Use. The Von Thunen model Problem.

From the data provided in table 1, determine the economic rent for each commodity at a distance of 0,100 and 200 km from the market center.

Table 1


Market (units): 200
Yield (price/unit): 0.78
Production (cost/unit): 0.52
Transport (rate/unit/100kms): 0.20

Market (units): 100
Yield (price/unit): 0.68
Production(cost/unit): 0.31
Transport (rate/unit/100kms): 0.10

Market (units): 50
Yield (price/unit): 0.60
Transport (rate/unit/100kms): 0.05

formula Er=Y(M_C)-Y.D.T
e=economic rent
y=yield per unit of land
m=market price per unit of production
c=production cost per unit of production
d=distance from market center
t=transport rate per unit of product, per unit of distance

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Solution Preview

Economic rent is a measure of the level of return that the market at large (all the potential bidders for land) would expect a piece of land to produce. It is basically a measure of the advantage, as the bidders see it, of one piece of land over another.

Economic rent is calculated as ...

Solution Summary

Von Thunen model help is modeled.