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

Question

Quizplus · Accepted Answer

The bid-rent model suggests that the closer a property is to the central business district (CBD), the higher the rent will be due to the desirability of shorter commutes. A decrease in the average traveling speed of an individual's commute would make locations closer to the CBD even more desirable, as it would increase the time and cost of commuting from further away, thereby increasing the competition and willingness to pay more for properties close to the CBD to reduce commute times.

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