Economics 366 - Midterm #1 Study Guide

# Economics 366 - Midterm #1 Study Guide - CHAPTER 1...

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CHAPTER 1 : Population density (4) - Definition : defined as total population divided by land area. - Example : in 1990, USA’s population density was 70 people per square mile. - Notes: Urban place (5) - Definition : any concentration of at least 2,500 people. An urban place is usually defined by political boundaries. This term does not correspond to economist’s notation of an urban area. - Example : Any big city. - Notes: Urban area (6) - Definition : refers generically to places of high population density; consists of one central city (or sometimes two) of at least 50,000 residents and the surrounding closely settled area. Thus, it is the physical city, definition without regard for political boundaries. An urban area is a place in which economic activity is highly concentrated. Both population and employment density are much higher than in surrounding areas. - Example : Mexico City, Jakarta, and so forth. - Notes: Metropolitan Statistical Area (MSA) - Definition : normally consists of a central city (sometimes two or three) with at least 50,000 people, plus any contiguous counties that are metropolitan in character. MSAs do not include parts of counties. - Example: - Notes: 1) Much more data is available for MSAs than for urbanized areas. Primary Metropolitan Statistical Area (PMSA) - Definition: an individual MSA. - Example: - Notes: Consolidated Metropolitan Statistical Area (CMSA) - Definition: a set of contiguous PMSAs. - Example: - Notes: Megalopolis Scale economies = indivisibilities - Definition : situation where increasing inputs by the same proportion (say double) would increase the output by a larger proportion (say triple or quadruple). - Example: - Basic trend(s):

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- Connection to urbanization : If scale economies were absent there would be no economies from concentrating production at a particular location. All production would then be done in small units distributed over different places. However, scale economies mean that products can be produced cheaper if they are concentrated in particular units/locations. This provides the motivation for the creation of urban areas as capital and labor is concentrated in these locations. Workers and businessmen benefit by locating as close as possible to these units and population density rises as a result. Diseconomies of scale (9) - Definition : exists if the long-run average cost is rising. - Example: - Basic trend(s): - Connection to urbanization: Scope economies Central place theory (11, 18) - Definition: - Example: - Connection to urbanization: Market area Spatial competition (12) Scale relative to market demand (14) Basic employment = export base employment (16) - Definition : employment in the export sectors of a city’s sectors with scale economies. Nonbasic employment - Definition : the remainder of employment (which satisfies local demand). Import substitution (16, 24) - Definition : process by which a region begins to build particular products/services on their own instead of importing them from abroad.
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