In order for an early trading city to

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Unformatted text preview: in exchange III. The existence of economies of scale in production A) I only. 2 B) I and II only. C) I, II, and III. D) I and III only. E) II and III only. 7) 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 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) $2000 B) $8000 C) $12,000 D) $24,000 E) $48,000 8) According to Glaeser, cities like Vancouver and London are A) education cities. B) manufacturing cities. C) consumer cities. D) in decline. E) none of the above. 9) According to Glaeser, low real wages in a city suggest that A) the city should do more historic preservation B) workers have high education C) workers are underpaid D) the city is an undesirable place to live E) none of the above. 10) 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 only. 3 B) II only. C) III only. D) I and II only. Note that answer choice D 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. E) I, II and III. 11) 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 only. B) II only. C) III only. D) II and III only. E) I, II and III. End Section 1. Section 2: Short Answers 4 1) 8 points total a) The railroad lowered transport costs. The dotted lines represent total cost (produced and delivered) after the transport innovation. The increase in market area is denoted by the short horizontal arrows. If I had more room, I would have exaggerated this, as the railroad was a major breakthrough and led to very big increases in market area of firms, especially those pr...
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This note was uploaded on 09/26/2013 for the course MATH 102 taught by Professor Maryamnamazi during the Spring '10 term at University of Victoria.

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