The magnitude of the transportation costs in a production process of a given land use and the relative sensitivity of these transportation costs to distance from the city center determine:

Question

Quizplus · Accepted Answer

The magnitude of transportation costs and their sensitivity to distance from the city center directly influence the slope of the bid-rent function. This function illustrates how land values decrease as the distance from the city center increases, primarily due to the increasing transportation costs associated with being farther from the central business district.

The Magnitude of the Transportation Costs in a Production Process