How do transportation costs and land prices change with increased distance from an economic activity center?

In the context of real estate and urban economics, as the distance from an economic activity center increases, transportation costs tend to rise while land prices decrease. Economic activity centers are locations where significant economic transactions occur, like downtown areas where businesses, services, and employment hubs are concentrated.

When you move away from these centers, the cost of transportation increases for people and goods, as it generally takes more time and fuel to reach these populated and economically active places. Businesses located far from these centers often face higher transportation costs, which can affect their operational costs and efficiency.

On the other hand, land prices typically decline as you move further from the economic activity center. This is due to the high demand for land in areas closer to the center, where the economic activity is concentrated. As the desirability of location decreases with distance, so does the price of the land.

The combination of these dynamics results in an increase in transportation costs and a decrease in land prices as one moves away from the economic activity center. Therefore, the most accurate representation of this relationship is that transportation costs increase while land prices decrease with increased distance from an economic activity center. This understanding is critical for real estate professionals as they analyze location choices for residential and commercial properties.