5. Consider a monocentric model with fixed housing unit h and the utility of residents u=c,where c is the consumption of the composite goods. The budget constraint of each residentliving at distance d from the CBD is c + ph = w-dt, where w is wage, p is housing rental rate,t is the unit commuting cost in distance. The city is open and free migration in and out. Theexternal utility they obtain out of the city is ū= 10. The rental rate on agricultural land is pA.(a) Illustrate why the consumption of residents living in all parts of the city will beequalized.(b) Derive the housing rental rate (p) as a function of d, distance from the CBD, What isthe slope? Draw a figure with p at the y-axis and d at the x axis.(c) Discuss how the boundary of the city is determined in this model, how would theboundary of the city respond to wage w and commuting cost t?

a) In the monocentric city model with fixed housing unit h and utility u = c, where c is the…

Answered: 5. Consider a monocentric model with…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A local government is considering building new public hiking trails in town.Suppose that the trails are public goods. There are two types of people in a smalltown economy, 1000 avid hikers and 1000 non-hikers, who have typical individualmarginal benefit curves: MB_H = 350 − 5Q and MB_N = 240 − 6Q for the hikersand the non-hikers respectively, where Q is the miles of trails. On the same graph,draw the marginal benefit curves for each type of person and MB of the overalleconomy. If the marginal cost providing this public good is $27000 per mile whatis the optimal level of the public good?
Suppose you have two types of users for your software: basic users and professionals. The value each group places on your basic program and your advanced program is given in the table below. Value of Product basic users Professionals basic program $65 $60 advance program $75 $150 You don’t know who exactly your basic and professional users are. How might you price your advanced program so that only your professionals by that version and you maximize profits? Group of answer choices $144 $150 $65 $75
Suppose that there are three plots of mountain resort land available for sale in Niseko and six potential buyers, each interested in purchasing one plot. Assume that all of the plots are basically indistinguishable and that the minimum selling price of each is $570,000. The following table lists each potential buyer's willingness and ability to purchase a plot of land. Person Darnell Eleanor Jacques Kyoko Musashi Rina Which of these people will purchase one of the three mountain resort plots? Check all that apply. Darnell Eleanor Willingness and Ability to Purchase (Dollars) 700,000 630,000 590,000 550,000 510,000 500,000 Jacques Kyoko Musashi Rina
Problem 1: Closed CityAssumptions of the model:The city is a circle with a radius that extends from the point 0 to the bound- ary of the city x ̄. There is a fixed population N, which we for now consider exogenous or fixed. All workers receive and income y and face a commuting cost t per mile that they drive. Workers have preferences over a compos- ite consumption good c with their utility function given by U(c) = c. All households demand a fixed quantity of land q, which is exogenously deter- mined and carries the rent r(x) per unit of land at location x. The rent at the boundary of the city is equivalent to the agricultural rent ra, that is r(x ̄) = ra All rental income is assumed to paid to absentee landlords who live outside the city. The household budget constraint is then given by y − tx = ri(x)q + c a) Make a list of your exogenous and endogenous variables. b) Solve for the urban bid-rent function.c) Solve for the remaining endogenous variables
1
What is NOT a key feature of gentrification? a_A return of wealthier classes to inner-city areas b_A reinvestment in dilapidated or undervalued neighborhoods or blocks c_An increase in rent and housing prices in the neighborhood d_Displacement of lower-class groups in the neighborhood e_Promotion of public trust as a resource
suppose the government of a desert community wants to punish excessive water useage, where "excessive" is defined as any usage greater than 100 gallons/week. to do this, the government paces a flat $100 income tax on anyone who consumes more than 100 gallons/week of water in any given week (so this tax could theoretically be levied 52 times per year). people who use less than 100 gallons of water each week will not face this $100 special tax. For these problems, consider the decisions between water consumption, X(sub)w and consumption of a composite good, X(sub)c, where P(sub)w =$2/gallon and the composite good's price is numeraire. suppose michael lives in this desert community and has a weekly income of $1000. 1. graphing michels budget contraint over (X(sub)w , X(sub)c) bundles, what is the slope of his budget conraint for bundles containing MORE than 100 gallons of water? 2. What is the slope of michaels budget constraint at the point (X(sub)w, X(sub)c)=(100,750)? 3. what is the…
5. Consider a monocentric model with fixed housing unit h and the utility of residents u=c, where c is the consumption of the composite goods. The budget constraint of each resident living at distance d from the CBD is c + ph = w-dt, where w is wage, p is housing rental rate, t is the unit commuting cost in distance. The city is open and free migration in and out. The external utility they obtain out of the city is ū= 10. The rental rate on agricultural land is pA. (a) Illustrate why the consumption of residents living in all parts of the city will be equalized. (b) Derive the housing rental rate (p) as a function of d, distance from the CBD, What is the slope? Draw a figure with p at the y-axis and d at the x axis. (c) Discuss how the boundary of the city is determined in this model, how would the boundary of the city respond to wage w and commuting cost t?
Utility. Suppose we have two cities, 1 and 2. Assume every individual has the same utility function given by: u(w;,r;) = 4 * WJ - 0.75 * r; where j = 1 or j = 2. Furthermore, for all parts of the problem assume the total population is fixed at 1, 000 and wages in each city are given by: W1 = 15W2 = 12 (a) What is the utility from each choice if r1 = 20 and 1'2 = 15. Is this an equilibrium? How do you know? (b) For the rest of the problem you can now assume that rents are increasing in the population of each city. Specifically, assume r1(L1) = 4 * L1 and T2 (L2) = 8 * L2. Compute the equilibrium population of each city equilibrium rents.
Suppose society consists of two individuals, A and B, who must split a fixed income of $150. Individual A's marginal utility of income is given by MUA=400-IA and individual B's marginal utility of income is given by MUB=600-6IB. Suppose the social welfare function is W=UA+UB. What if the social welfare function is, instead, W=min(UA,UB). 44. Then equity in the distribution of income would be synonymous with equality of What if the social welfare function is, instead, W=UA+2.6UB and individual B's marginal utility is, instead, MUB=200-IB. 45. What is the optimal distribution of income to individual A? $ 46. What is the optimal distribution of income to individual B? $ 47. Equity in the distribution of income would be synonymous with equality of
The COVID pandemic has changed where many people are able to do their work at the city or metro-area level. Which of the following best describes the predictions from a Rosen-Roback style model on how separating work (in the model, wage) from location of residence might impact house prices across different areas. O This should put upward pressure on house prices (and population) in traditionally high-wage areas, and downward pressure on house prices (and population) in traditionally high amenity areas. O This should put downward pressure on house prices (and population) in traditionally high-wage areas, and upward pressure on house prices (and population) in traditionally high amenity areas. O This should put upward pressure on house prices across all areas, regardless of the initial factors associated with that area. O This should put downward pressure on house prices across all areas, regardless of the initial factors associated with that area.
The government plans to construct a road to your village .it is envisaged that this project will increase income as all the villagers will be employed in one way or the other on this project .In performing the cost-benefit analysis of the project ,labor and income change become important cost and benefit components,respectively. True or false, and explain

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