Let's consider a bid-rent model. Assume that a person has to go to the central business district (CBD) to work or to get the goods and services that the person wants. Each household may choose to live in the CBD, 1 mile away from the CBD, or 2 miles away from the CBD. All houses are identical in their features, except for location. A household may live in a motor home and move from one lot to another with no cost. A one-man household must pay a rent to live in a certain lot. The person is employed and completes one-round trip to the CBD every day, 15 days per month. We assume that this person earns $30 per hour and can travel at an average speed of 15 miles per hour. We only consider the person's time spent on working and commuting each day: that is, the person can reduce the time cost of commuting by living closer to the CBD. Time saved from commuting can be used to work more and earn more money. If this one-man household is currently living in a lot 2 miles away from the CBD, how much should this person be willing to pay more in monthly rent to live in the CBD? Check the answer with the correct value for the cost of daily travel per mile, the cost of commuting each month, and how much this person should pay more in monthly rent to live in the CBD. A) $1.00,$120 per month, $60 per month B) $1.00,$60 per month, $60 per month C) $2.00,$120 per month, $120 per month D) $2.00,$120 per month, $160 per month E) $2.00,$160 per month, $160 per month Let's consider a bid-rent model. Assume that a person has to go to the central business district (CBD) to work or to get the goods and services that the person wants. Each household may choose to live in the CBD, 1 mile away from the CBD, or 2 miles away from the CBD. All houses are identical in their features, except for location. A household may live in a motor home and move from one lot to another with no cost. A one-man household must pay a rent to live in a certain lot. The person is employed and completes one-round trip to the CBD every day, 15 days per month. We assume that this person earns $30 per hour and can travel at an average speed of 15 miles per hour. We only consider the person's time spent on working and commuting each day: that is, the person can reduce the time cost of commuting by living closer to the CBD. Time saved from commuting can be used to work more and earn more money. If this one-man household is currently living in a lot 2 miles away from the CBD, how much should this person be willing to pay more in monthly rent to live in the CBD? Check the answer with the correct value for the cost of daily travel per mile, the cost of commuting each month, and how much this person should pay more in monthly rent to live in the CBD. A) $1.00,$120 per month, $60 per month B) $1.00,$60 per month, $60 per month C) $2.00,$120 per month, $120 per month D) $2.00,$120 per month, $160 per month E) $2.00,$160 per month, $160 per month
