Bid-rent curves a. determine the most appropriate land use for any given area. b. determine the most profitable land use on a region-by-region basis. c. illustrate the constant tension between externalities and economies of scale. d. illustrate how low-density land uses gravitate the periphery of heavily populated areas.

The correct answer is D. Bid-rent curves illustrate how low-density land uses gravitate the periphery of heavily populated areas.

Explanation:

The Bid-Rent Theory is a spatial model of the city developed in 1964 by the American economist William Alonso based on the Tunen model, adapted to the urban land market by analogy with rural land, where the city is seen as the central business district around which workers settle, and there is competition for land between its various uses: offices, shops and housing. Firms and households have their own rental rate function - the willingness to pay for location relative to the city center.

According to this theory, the preferences of firms and households are determined by the rental rate function, which shows the willingness to pay for location relative to the city center.

Initially, the houses and buildings of the poor are located on the very outskirts of the city, as this is the only place they can afford, while low-income families can sacrifice more living space in order to expand access to employment.

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