Question

multi step problem. thank you!

1. Balancing Rent and Commuting Costs (6 points) Suppose that a household resides in an urban area at a distan of 8 miles from downtown. The household occupies a residential lot measuring 5000 square feet, and at this distance from downtown land rent is $2.00 per square foot per year. One of the members of the household must commute to downtown for work five days a week (50 weeks per year). The total cost of this commuting (counting time costs as well as monetary costs) is $6.00 for each work day. 1. How much is the household currently paying in land rent per year? Show your work. land rent per year b. How much is the household currently paying in commuting costs per year? Show your work. current commuting costs per year Assume that the per mile cost of commuting is everywhere the same (i.e., it's the same cost to travel a mile either near downtown or on the outskirts of town). How much would the household's annual commuting costs be if they lived 6 miles from downtown or 10 miles from downtown? Show your work commuting costs per year living 6 miles from downtown commuting costs per year living 10 miles from downtown

Answer 1

Solution: (1) Balancing Rent and commuting coste : household residence = 8 miles measuring = 5000 sq feet. rent = 82.00 per square foot / year One member must continue = 5 days a week =(50 cueers peryear) total cost = $6.00 foreach work day @ Amount the household currently paying in land gent per year is: (and rent = $(5000* 2) = $10,000 peryeay) 6 Household currently paying in Commurting costs per year: for a week = $ (6+5) = ($ 30 for a year = $ C30*50) = $1500 peryear

© Households annual costs commuting_be of lived for 6 miles from downtown or lomiles from downtown: - for 8 miles cast = $6 per day for I mile = $6/8 berday for Gmiles, cost of commuting = r * 6 sŚ -84.5 per work day for to miles, cost of commuting = 8 *10 = 18 =(87.5 perday Soyearly cost of commuting is. for Gmiles = $(4.5*5) *50 - $1125 per year]

for lomiles = = $ (7.5* 5) *50 $1875 peryear] @ Assuming land vent = $ 2.20 per square foot (miles from downtown) foot and Land sent = $1.80 per square (lomiles from down town) Land Rent per year if they lived 6 miles from downtown or lo miles from downtown: at 6 miles = $ 2.20 per sq.ft at co miles = $ 1.80 per sqft Size of land rented = 5000 sqft and rent peryear: $65000 * 2.2) for 6 miles = = $11,000

for 10 miles = $(5000*1.8) = $9000 @ living 8 miles from Downtown: Since land sent porsq.ft for 8 miles is not given, at lomiles land pent = $ 9000 Commuting Cost = 1875 Total = 9000+ 1875 =[8 10875 at 8 miles land sent = 0 Commuting cost = $1500 Total = $ 10000 +$1500 = (811500 Here 10875 211500. in Hence it is not a location al equilibrium of cost-i8 increasing overall so they should not more closes