First Quiz Flashcards
What are the three reasons LU is a special subsection of economics?
- Land is immobile
- Land is heterogenous
- LU decisions often have significant externalities
What are the determinants of LU and LUC?
- environmental factors
- neighbours
- policy (LU, subsidies, etc.)
- socio-economic factors
- technology
What are 2 socio-economic factors surrounding LU and LUC?
- road density
- population density
What are some environmental factors surrounding LU and LUC?
- temperature (min, max, average)
- precipitation
Why does population density matter?
- demand for land
- policy impacts
- urban development / sprawl
What does LUC mean?
Land Use Change
What does LU mean?
Land Use
What is the von Thunen theory?
Commodities with higher unit returns and transportation costs will be produced closer to the market.
What is von Thunen rent?
“created by spatial variation or location of a resource”
What are the von Thunen rings?
What are the 7 von Thunen assumptions?
- Fixed inputs - no substitution
- Flat terrain
- Homogenous land characteristics
- Isolation
- Simple transportation
- Single centre/market
- Surrounded by wilderness
Why is one of the von Thunen assumptions that the market is surrounded by wilderness?
So that new agricultural land can be cleared as demand increases.
What is the most problematic von Thunen assumption, and what did it mean for urban economics?
Homogenous land: farmland is primarily priced based on productivity, not as much on location.
Since this assumption doesn’t affect urban economics, it means that von Thunen theory was formative for it.
Why is one of the von Thunen assumptions that there’s fixed inputs with no substitution?
If we can substitute capital for land (i.e. just add more fertilizer and buy less land), the model doesn’t hold up.
What is the equation for von Thunen’s theory?
profit = pm-iK-rS-mtd
How do we find the maximum rent a farmer would be willing to pay with von Thunen?
Set profit to zero, solve for r.
How do we find the outer limit of the farming area with von Thunen?
Set r to 0, solve for d.
What is p in the von Thunen model?
p = price per unit of output
What is m in the von Thunen model?
m = total quantity of output
What is i in the von Thunen model?
i = input cost
What is K in the von Thunen model?
K = composite capital inputs
What is r in the von Thunen model?
r = rent per land unit (i.e. acre, ha)
What is S in the von Thunen model?
S = size of land input
What is t in the von Thunen model?
t = transportation rate per unit of output, per unit of distance
What is d in the von Thunen model?
d = haulage distance
How do we find C?
Set the two equations equal to one another and solve for d.
What is von Thunen rent?
Economic rent created by spatial variation or the location of a resource.
What effect will better roads have on WTP rent?
This changes the slope of the rent curve. The maximum rent they are willing to pay doesn’t change. The distance away from town they can afford to be does increase though.
What will happen to the bid-rent curves if apple farmers are always willing to pay more than strawberry farmers?
Then there will be no strawberry farms, so the strawberry bid-rent curve will just be fully below the apple farm bid-rent curve.
Partial derivatives indicate that the distance limit of cultivation increases as ______ (3 things).
- p rises
- t falls
- K falls
What are some criticisms of von Thunen?
- differential (changing) transportation cost
- variations in topography
- soil fertility and climate conditions
- trade activities with other states
- multi-core state
What are the four rings von Thunen suggested, from inner to outer?
- intensive farming and dairy
- managed forest
- extensive field crops like grains
- ranching and grazing
