EC148-1.PS3.May12,10

EC148-1.PS3.May12,10 - 1 Richard Arnott due: May 13, 2010...

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Richard Arnott May 13, 2010 due: May 20, 2010 Economics 148 Land and Resource Economics Problem Set 3 DO 35 POINTS’ WORTH OF THE FOLLOWING QUESTIONS. 1. (15) The following two questions were on the midterm examination. Answer 1 of them. A. Consider the open monocentric city model of land use and land rent, with two income groups, each group having a fixed lot size. Suppose that the poor live closer to the CBD than the rich. i) What parameter inequality leads to the poor living closer to the CBD than the rich? Explain the parameter inequality, and why it implies that the poor live closer to the CBD than the rich. ii) Examine the effects of an increase in the income of the poor. iii) When is it appropriate to apply the open-city monocentric city model rather than the closed-city monocentric city model? B. Using the closed monocentric city model with identical individuals and fixed housing unit floor area: i) Analyze the effects of the introduction of the electric streetcar on housing rent and
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EC148-1.PS3.May12,10 - 1 Richard Arnott due: May 13, 2010...

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