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Bid rent curve [1] The bid rent theory is a geographical economic theory that refers to how the price and demand for real estate change as the distance from the central business district (CBD) increases. Bid Rent Theory was developed by William Alonso in 1964, it was extended from the Von-thunen Model (1826), who analyzed agricultural land use.
The produce obtainable on the best available rent-free land is known as the margin of production. Since landlords have a monopoly over a given location, the only limiting factor for rent is the margin of production. Thus, rent is a differential between the productive capacity of the land and the margin of production. [citation needed]
The “40x” rent rule states that your annual gross income should be around 40 times your monthly rent payment. For example, if your annual pre-tax income is $50,000, the rule suggests your ...
Differential ground rent and absolute ground rent are concepts used by Karl Marx [1] in the third volume of Das Kapital [2] to explain how the capitalist mode of production would operate in agricultural production, [3] under the condition where most agricultural land was owned by a social class of land-owners [4] who could obtain rent income from farm production. [5]
Economic rent is also independent of opportunity cost, unlike economic profit, where opportunity cost is an essential component. Economic rent is viewed as unearned revenue [ 2 ] while economic profit is a narrower term describing surplus income earned by choosing between risk-adjusted alternatives.
Where i is the interest rate, r p is the property tax rate, m is the cost of maintenance, and d is depreciation. The rent is the sum of these rates multiplied by the price of the house, [2] P H. More detailed user cost models consider differential interest costs for housing debt and owner equity and the tax treatment of housing capital income. [3]
An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20% down payment and a qualifying ratio of 25%. For example, a composite HAI of 120.0 means a family earning the median family income has 120% of the income necessary to qualify for a ...
The cost per transport-unit k is: = + Where f is the direct cost of working, i the interest on capital A and C the annual volume traffic. Since f=F(A): = + and the minimum is found by imposing the first derivative equal to zero: