Question

Suppose we live in a monocentric city where streetcars have replaced horse carts. However, the streetcars have begun to break down and slowed in their reliability and speed. Compared to fully functioning streetcars, we expect that

Select one:

a. residents will outbid agricultural users further from the city center

b. residential areas will grow

c. city wages will increase

d. land rent at the city center will increase

Answer 1

d. land rent at the city center will increase

The breakdowns in street cars have slowed their reliability and speed.Therefore, this will lead to an increase in the commuting expenses. As a result, staying far from the city center will become costlier. This would therefore lead to people trying to find places which are close to the city center, thereby pushing the land rent at the city center high.

Other options are wrong. Residents won't outbid agrcultural users further from the city as there is less utility in staying far from the city center now, owing to the increased commuting costs. Similarly, residential areas will not grow. They will get concentrated near the city center. As the cost of commuting has increased, it will increase the cost for people staying far from the city. Relatively speaking, the costs for people living inside the city has now decreased. Therefore, their wages will not increase.