Exercises Chapter 8 2019.pdf - Chapter 8 Question 1 Suppose there are three types of houses in a city E(expensive M(medium and C(cheap Each household

# Exercises Chapter 8 2019.pdf - Chapter 8 Question 1 Suppose...

• Homework Help
• 1

This preview shows page 1 out of 1 page.

Chapter 8 Question 1: Suppose there are three types of houses in a city: E (expensive), M (medium) and C (cheap). Each household prefers the same spending on public education. Schools are initially financed with property tax based on market value, and initially there were three school districts. Suppose the property tax is replaced by a square-foot tax (e.g. 2\$ per square foot per year). The equilibrium number of school districts will decrease to one if … because … Question 2: Households in Metro differ in their demand for public schools: half are low demanders (L) and half are high demanders (H). In addition, houses differ in value: half are expensive (E) and half are cheap (C). The location choices of households are based on property taxes and spending on public schools. a. Normally, we would expect ___ school districts as households sort themselves with respect to ___ and ___. b. There will only be two school districts if ___

#### You've reached the end of your free preview.

Want to read the whole page?

Unformatted text preview: Question 3: Consider a city of 200 people (100 aged and 100 young) and two neighborhoods (100 people in each). People generally prefer to live close to aged people. To draw the rent-premium curves, put the number of aged people in neighborhood A (from 50 to 100) on the horizontal axis. The premium curve of aged people is concave from below, and in a neighborhood of 100 aged people, the premium is \$30. The premium of young people is linear, and in a neighborhood of 100 aged people, the premium is \$50. The two premium curves intersect at Aged=70, with the rent premium=\$20. a. Draw the two premium curves b. Integration (50 aged, 50 young) *is isn’t+ a stable equilibrium because… c. A mixed neighborhood (70 aged, 30 young) *is isn’t+ a stable equilibrium because… d. Segregation (100 aged, 0 young) *is isn’t+ a stable equilibrium because…...
View Full Document

• Fall '17

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern