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What are the rents to the land

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Reference no: EM132503234

Suppose a piece of land has a general production function of f(N) = aN - (b/2)N^2 where N is the number of workers. Suppose output receives a price of p in a perfectly competitive market. For simplicity, suppose that the supply of workers is perfectly elastic and the per-worker wage is equal to zero.

Additional Information: The optimal number of workers is N*=a/b. The rent to land is (a^2)/2b

Question 1: Suppose that output must be transported to the port for export cost, c, per unit of distance. Consider a plot of land that is a distance, x, away from port. What are the rents to the land?

Reference no: EM132503234

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