According to the bid-rent model, which of the following changes in the model's underlying assumptions would most likely result in a decrease in rents for properties closest to the central business district (CBD)?
A) An increase in an individual's hourly wage
B) An increase in the average traveling speed of the individual's commute
C) An increase in the number of households attempting to live in the area
D) An increase in the number of days an individual must commute to work

Question

Quizplus · Accepted Answer

An increase in the average traveling speed of an individual's commute would make it easier and quicker for people to travel from further distances, potentially reducing the demand and consequently the rents for properties closest to the central business district (CBD). This is because the bid-rent model suggests that the closer a property is to the CBD, the higher the rent will be due to higher demand for shorter commutes. If commuting becomes easier, living further away becomes more viable, decreasing the demand for close proximity and thus reducing rents near the CBD.

According to the Bid-Rent Model, Which of the Following Changes