Question: I need solution to understand. all the questions in problem2. Thank you Problem 2: Rents, Land Use, and Social Welfare [4 points] Suppose a forested

I need solution to understand. all the questions in problem2. Thank you

I need solution to understand. all the questions in problem2. Thank you

Problem 2: Rents, Land Use, and Social Welfare [4 points] Suppose a forested piece of land has a timber production function of f(N) = 10N - N2, where N is the number of workers. Suppose timber 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. 2.A. [0.5 points] What is the optimal number of workers N* and the rent to the land? 2.B. [0.5 points] Suppose that timber must be transported to the city to get processed. Suppose one unit of timber is transported at a cost of 2 dollars per unit of distance. Consider a plot of land that is a distance x away from port. What are the rents to the land? 2.C. [0.5 points] Beyond what distance from the city would we no longer expect to see land dedicated to forestry? 2.D. [1 point] Now suppose that there is another competing use for land: agriculture. Assume that agriculture follows the production schedule g(N) = 20N - N2. Just like timber, agriculture must also be transported to the city. For simplicity, assume that both the per unit output price and the per-unit-distance trasnsportation cost of agriculture are equal to 1. Over what distance will land be devoted to agriculture and forestry? 2.E. [0.5 points] What do you expect to happen to the amount of land dedicated to forestry if the price of timber goes down? Explain. 2.F. [1 point] Now suppose that land devoted to forestry provides the social benefit of regulating climate through carbon sequestration: each unit of land devoted to forestry provides a benefit of 25 dollars. What is the socially optimal distance that separates agriculture and forestry

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