ECN 441 – Problem Set #7
economies代写 This problem set contains sample questions from previous midterm and final exams. The structure of your exam will be as follows:
This problem set contains sample questions from previous midterm and final exams. The structure of your exam will be as follows:
- Part 1: Multiple Choice (≈ 15)questions economies代写
- Part 2: Short Answer (≈ 5)questions
Both parts will be weighted equally in the final exam score. Sample exam questions are below.
Question #1 economies代写
When firms invest in research and development (R&D), they can increase product quality, product varieties, and reduce production costs. All of these investments generally lead to increases in GDP, output per worker, and welfare. Which of the following statements characterizes the costs and market allocations of investments in R&D?
(A)The competitive market produces socially optimal levels of investment inR&D.
(B)The average private costs of investing in R&D are higher than the marginal social costs of investing in R&D, due to knowledge spillovers.economies代写
(C)The average private costs of investing in R&D are lower than the marginal social costs of investing in R&D, due to knowledge spillovers.
(D)The competitive market delivers less investment in R&D than is socially optimal.
(E)The competitive market delivers more investment in R&D than is socially optimal.
(F)(B) and(D)
(G)(C) and(E)
None of the above.
Question #2
In reference to city size distributions, Zipf’s Law refers to:
(A)A directly proportional relationship between city population ranks and population sizes.economies代写
(B)A linear relationship between city population ranks and population sizes.
(C)An inverse relationship between city population ranks and population sizes.
(D)None of the above.
Question #3
“Trading cities” are cities that emerge when production is concentrated around centers of trade and logistics, providing jobs to workers who live nearby. Of the items listed below, what is the key assumptionor combination of assumptions that need(s) to be relaxed in the backyard production model in order to ensure the emergence of trading cities?
(A)Constant returns to scale in exchange.
(B)Production takes place under constant returns to scale.
(C)No productivity differences between locations.
(D)All of the above.economies代写
(E)(A) and(B)
(F)(A) and(C)
Question #4
Because of climate change, average temperatures in 2100 will probably be much larger in Washington,
D.C. than they are today. The hot, humid summers are viewed as a disamenity by the city’s residents. Assuming that the temperature increases do not affect the demand for labor, what does the standard model of the urban labor market predict will happen to the city’s wages and employment?
(A)Wages will unambiguously increase.
(B)Wages will unambiguously decrease.economies代写
(C)Employment will unambiguously increase
(D)Employment will unambiguously decrease
(E)(A) and(C)
(F)(A) and(D)
(G)(B) and(C)
(H)(B) and(D)
Question #5 economies代写
Suppose a community has 7 different individuals, and it is deciding how large a police force to provide. Each individual has inverse demands for a police force of size Q given by:
Pi(Q) = 8 − Bi Q
where Bi = i for i = 1, 2, …, 7. In providing the police force, the community is planning to assess a head tax of $4 per person. How large of a police force would be chosen under majority rule and by a social planner?
(A)Themedian voter would choose a police force of size Q = 1, but the social planner would choose Q = 2.economies代写
(B)The median voter and social planner would both choose a police force of size Q =1
(C)The median voter would choose Q = 1, but the social planner would choose Q =1.5.
(D)The median voter would choose Q = 2, but the social planner would choose Q =1.
Question #6 economies代写
In the monocentric city model, the city’s radius can be thought of as a rough proxy for urban sprawl. The city’s radius increases (increasing sprawl) as:
(A)Commuting costs to the CBD fall.
(B)The city’s population increases.
(C)Agricultural rents increases.
(D)Incomes fall.economies代写
(E)All of the above.
(F)(A) and(B)
(G)(C) and(D)
(H)(A), (B) and(C)
Question #7 economies代写
Which of the following statements characterizes congestion and the free flow of traffic on U.S. highways?
(A)If the volume of traffic is sufficiently low, the competitive market produces socially optimal levels of driving.
(B)When traffic volumes are large enough, the marginal social cost of driving becomes larger than the average (or private) cost of driving.
(C)Whentraffic volumes are large enough, the marginal social cost of driving becomes smaller than the average (or private) cost of driving.
(D)None of the above.
(E)(A) and(B)
(F)(A) and(C)
(G)(B) and(C)
Question #8
The annual user cost of housing formula is given by:
C(V ) = (i + h + d − g)V
where V is the value of the house (if owned), i is the mortgage interest rate, h is the property tax rate, d is the rate of housing depreciation, and g is the rate of capital gains (from housing price appreciation). What happens to the annual user cost of housing if the overall rate of inflation increases?economies代写
(A)The change in C(V ) is zero, because the increase in mortgage interest rates, i, that comes from inflationwill be exactly offset by inflation’s impact on housing price appreciation, g.
(B)If federal tax exemptions on property taxes are added to the model, the annual user costs of housing will fall as inflation increases.
(C)Iffederal tax exemptions on home mortgage interest are added to the model, the annual user costs of housing will fall as inflation increases.
(D)All of the above. economies代写
(E)(A) and(B)
(F)(A) and(C)
(G)(B) and(C)
Question #9
Which of the following statements characterizes the time costs associated with transit ridership under Mohring economies?
(A)If ridership is sufficiently low, the competitive market produces socially optimal levels of urban transit ridership.economies代写
(B)At small transit volumes, the marginal social time costs of urban transit are larger than the average (or private) time costs of urban transit.
(C)By increasing the frequency of bus or rail service, the transit authority can reduce time costs for everyone riding the system.
(D)None of the above.
(E)(A) and(B)
(F)(A) and(C)
(D)(B) and(C)
Question #10
Despite being politically popular, rent control is widely viewed by urban economists as creating more problems than it attempts to solve. What are some of the problems with rent control as a policy to maintain rental price stability and preserve neighborhood composition?
(A)Rent control leads to higher long-run equilibrium rental prices.
(B)Rentcontrol laws slow down the dynamic process of adjustment to a new long-run equilibrium in the housing market.economies代写
(C)By keeping prices high, rent control laws encourage landlords to maintain the housing stock inthe face of deterioration.
(D)All of the above.
(E)(A) and(B)
(F)(A) and(C)
(G)(B) and(C)
Short Answer: Question #1
An urban planner is trying to use policies to correct the negative externalities from traffic congestion. Although she knows that dynamic congestion pricing is the most efficient tool for combating these negative externalities, politically this approach is infeasible. Instead, the city votes for an odd-even quantity restriction. Under this policy, only cars with license plates ending in odd numbers can commute on odd-numbered days, while only cars with license plates ending in even numbers can commute on even numbered days.
1.1Does the policy encourage drivers to switch to alternative transport modes? Why or why not? [2 points]economies代写
1.2Does the policy encourage drivers to change the time of day they travel? Why or why not? [2 points]
1.3Doesthe policy encourage drivers to make different route choices? Why or why not? [2 points]
1.4Isthe policy likely to make drivers move closer to where they work? Why or why not? [2 points]
1.5Explain one simple way that higher-income individuals can avoid this policy. [2points]
Short Answer: Question #2
One critical feature of U.S. housing markets is variation across cities in the elasticity of housing supply. As cities with different supply elasticities experience positive increases in housing demand, some cities have experienced large increases in housing prices, while others cities have seen lots of new construction and relatively little increases in prices.
2.1Using a standard diagram for the supply and demand for housing (ignoring the price dynamicsemphasized in the stock-flow model), explain what happens to housing prices and quantities when a city like New York City (with large housing restrictions) experiences a positive demand [4 points]economies代写
2.2Ifthe housing supply curve drawn above is kinked, explain [2 points]
2.3Using a similar diagram to 2.1, explain what happens to housing prices and quantities when city like Houston (with few housing restrictions) experiences a positive demand shock. [4points]
Short Answer: Question #3
The following figure depicts the marginal social cost, average (private) cost, and demand (marginal benefit) curve for urban transit ridership.economies代写
3.1Explain why the average cost curve is downward sloping [3 points], and why the average cost curve is above the marginal cost curve at low transit ridership levels [1 point]. Reference the concept of “Mohring economies” in your answer.
3.2Mark the competitive equilibrium point on the curve as point A. [2points]
3.3Mark the socially optimal equilibrium point on the curve as point B. [2points]
3.4Shade in the appropriate deadweight loss triangle. [2points]
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