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Homework1 - Homework#1 Econ 155 Electronic Answers Due on...

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Homework #1 Econ 155 Electronic Answers Due on BSpace by 5pm 2/2/12 1) Define the following terms: Localization economy Urbanization economy Weight gaining industry Weight losing industry 2) List three sources of agglomeration economies and describe one of them in detail. 3) True/False/Uncertain: A weight gaining industry will tend to locate near its inputs. 4) Consider an economy of 10 million people that can costlessly choose to locate in one of two locations (A or B). Everyone in this economy has the same preferences over these locations which are represented by the following utility curves which capture the net effects of agglomeration and congestion on utility: As discussed in class, a useful trick for analyzing the equilibrium in such models that guarantees the population of the two cities adds to 10 million is to convert the x-axis to U B U A 0 10 Population (in millions)
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the number of people in location A. Since an increase in the number of people in location A implies a decrease in location B, the figure becomes:
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Homework1 - Homework#1 Econ 155 Electronic Answers Due on...

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