Question
We consider a monocentric city represented by a segment x [0,x f ] where 0 stands for the CBD where everybody works and earns a
We consider a monocentric city represented by a segment x [0,xf ] where 0 stands for the CBD where everybody works and earns a uniform (exogenous) urban wage w > 0 and xf is the city fringe. The rural wage a is normalized to zero. Agents located at a distance x from the CBD pay a rent R(x). The utility of an agent is her disposable income.
Fixed commuting cost
1.1 Private transportation Agents drive to the CBD and incur a fixed commuting cost cc > 0 per unit of distance.
1. Find the general formula for R(x) and xf .
2. What is the impact of each parameter of the model on these two outcomes?
3. Graph the rent function if cc = 4 and w = 100.
please answer each question part clearly.
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