6 according to glaeser low real wages

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Unformatted text preview: workers have high education D) workers are underpaid E) none of the above. 2 7) According to the leftover principle, if rents can continuously adjust to market forces and potential renters bid their true willingness to pay, then I. landlords get all the benefits of any policy that increases renter willingness to pay. II. landlords suffer all the costs of any policy that decreases renter willingness to pay. III. both landlords and renters gain when local government implements beneficial policy. A) I, II and III. B) I only. C) II only. D) III only. E) I and II only. Note that answer choice E wasn’t on the original exam. This was an error on my part. Everyone received full points for this question, regardless of which answer they chose. 8) Related to the previous question, if renters sign long term contracts then which of the following statements about local government policy is true? I. renters get all the benefits of any policy that increases renter willingness to pay. II. renters suffer all the costs of any policy that decreases renter willingness to pay. III. both landlords and renters lose when local government implements wasteful policy. A) I, II and III. B) I only. C) II only. D) III only. E) I and II only. 9) In order for an early trading city to form, which of the following would have been necessary? I. The existence of gains from trade II. The existence of economies of scale in exchange III. The existence of economies of scale in production A) I, II, and III. B) I and III only. C) II and III only. D) I only. E) I and II only. 10) Suppose the City of Victoria taxes each rental unit $400 each year and burns the revenues in a large bonfire (assume no one gets any benefit from the bonfire). The annual interest rate is fixed at 5%. Assuming all properties in Victoria have one 3 residential rental unit on them and that the supply of rental units is fixed, how much will these properties decline in value as a result of this wasteful policy? A) $48,000 B) $24,000 C) $12,000 D) $8000 E) $2000 11) According to Glaeser, cities like Vancouver and London are A) education cities. B) consumer cities. C) manufacturing cities. D) in decline. E) none of the above. End Section 1. Section 2: Short Answers 4 1) 8 points total The horizontal arrows denote the change in market area that results from this change in production costs. 5 a) 4 points In the 1880s, the industrial revolution was in full swing. During this period of time, new manufacturing processes were introduced that lowered unit produc...
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