5.8

• Why people choose certain locations for various types of economic activity: Factories, stores, restaurants, agriculture
• An economic model that suggested a pattern for the types of products that farmers would produce are different positions relative to the market ( community ) where they sold their goods
• The Von Thunen model was created by Johann von Thunen - German farmer
• The Von Thunen Model is based on the concept that farmers decisions on what to produce were based largely upon 4 factors: Transportation cost, Land cost, Intensity of land use, and Perishability of the product
• Land closest to the market is the most valuable and the land

  farther away decreases in value.
• Farmers will use land close to the market more intensely
• The farther goods have to be transported → the higher the cost
• Perishability: how well a product can survive transport

  without spoiling or breaking
• Intensive farming practices are used closer to the city because they require less space per unit produced
• Extensive farming practices are used further from the city because there is more space available
• Extensive farming practices are used further from the city because there is more land available at lower prices
• First Zone : The zone closest to the market ( involves horticulture )-Need to get goods to the market quickly
• Horticulture: produces perishable items
• Horticulture includes Gardening and Dairy farming
• Second Zone: includes forests, wood is an important resource for building and fuel, includes heavy materials that are costly to transport.
• Third Zone : Crops like wheat and corn - Do not perish as quickly and are easy to transport.
• Fourth Zone: Used for grazing livestock - Could be located farther from the market because rancher could walk the livestock.
• Grain and Livestock: Land farther from the market was less valuable- Because grain and livestock are less perishable than the crops in the inner ring the farmers could locate in an area of cheaper land farther from the market.
• Wheat farms in South Dakota: Recent studies show that the distance to the market still greatly influences land prices- Value of land in North Dakota - Land within 5 miles of grain elevator is worth double the amount of land 25 miles away
• Bid Rent Curve: Used to determine the starting position for each

  land use relative to the market, as well as where

  each land use would end
• Each line on the Bid Rent and Von Thunen's Model graph reflects the farmers’ willingness to pay for land at various market.Farmers pay MORE for land closer to the market - however, it does depend on what their activity is.
• In a free-market economy- where supply and demand determine the outcome of competition for land- the farmer who will have the greatest

  profit will pay the most at each location.