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?

The objective of the question is to understand the monocentric city model and its implications on…

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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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
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…
Consider the model of a rational consumer that cares about consumption of private goods and consumption of broadcast public television (a public good). Suppose that the total level of broadcast public television provided through voluntary contributions is 10 hours of programming. Then the government decides to raise money through a tax and provide 10 hours of programming to the public. What would we predict about crowd-out of voluntary contributions to broadcast public television when government does this? How would the answer change if consumers get warm glow utility from donating to broadcast public television in addition to utility from the public television itself? (Be specific.)
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.
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.
Suppose that there are three beachfront parcels of land available for sale in Asilomar and six people who would each like to purchase one parcel. Assume that the parcels are essentially identical and that the minimum selling price of each is $445,000. The following table states each person's willingness and ability to purchase a parcel. Person Willingness and Ability to Purchase (Dollars) Ana 510,000 Charles 470,000 Dina 420,000 Gilberto 390,000 Juanita 380,000 Yakov 600,000 Which of these people will buy one of the three beachfront parcels? Check all that apply. A. Ana B. Charles C. Dina D. Gilberto E. Juanita F. Yakov Assume that the three beachfront parcels are sold to the people that you indicated in the previous section. Suppose that a few days after the last of those beachfront parcels is sold, another essentially identical beachfront parcel becomes available for sale at a minimum price of $432,500. This fourth…
Suppose five people have houses on the same small lane. They all individually benefit from regular maintenance of the lane. Their individual marginal benefit curves are P = 8 ― (1/10)Q, where P reflects a willingness to pay in thousands and Q is the length of the road repaired in ten-yard units. The cost of maintenance is $2,000 per ten yards. Suppose one person is currently the only one paying for maintenance. How much does this person buy, and what is the deadweight loss? Does anyone individually have an incentive to pay for additional maintenance, and why or why not?
Refer to Figure 11-1. Assuming that higher education spending means better quality, how many families will receive lower quality education because of the government providing public education?
In the context of the monocentric city model, which of the following statements best describes the demand-side reason that population density is higher near the central business district (CBD)? Note that the word "price" in the answers below refers to the price to rent a square foot of housing space. O Firms have an incentive to build less square footage of housing space per unit of land as price increases O Firms have an incentive to build more square footage of housing space per unit of land as price increases O Consumers demand less square footage of housing as price increases O Consumers demand more square footage of housing as price increases
Electric vehicles (EVs) are an important part of meeting global goals on climate change. EVs have emissions up to 43% lower than diesel vehicles. However, In Australia, electric vehicles account for only 0.6% of all new sales in 2020. Suppose the market for EVs is perfectly competitive. The market demand for EVs is given by: p 20- 2Q and the market supply for EVs is given by: p = 3Q. The marginal social benefit of adopting EVs is given by: p 20 - Q. To encourage the purchase of EVs, the NSW government decides to subsidise the consumers. The optimal level of subsidy is reach a socially optimal equilibrium. for the market to
A community is considering how to allocate expenditures between education and other goods. a) Draw the budget constraint, putting "education" on the x-axis and "other goods" on the y-axis. b) On a separate graph, contrast the budget constraint of a poor community with that of a richer community. c) On another graph and using indifference curves, explain why a poorer community is likely to spend less on education than a richer community. Could you please help with this question? Thank you...

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