Problem Set #1
(1) Consider a country with two regions that are separated by a mountain range. Initially,
there are no cities in the country. Suppose that a tunnel is bored through the mountain,
decreasing travel costs be
(1) The beer industry is competitive and a Staten Island Micro Brewery brews 10,000
bottles per year. Its average total cost is $0.50 per bottle. The market price for its beer is
$2 per bottle.
(a) What is t
Problem Set #3
due Tuesday, Apr 5, in class
(1) The third largest city of a country has a population of 2.5 million. Using the ranksize rule, what is the population of the 10th largest city?
Answer: The rank-size rule states that Ni=C/Ri,
Fall 2011, Karl Storchmann
Instructions: Please read all the questions carefully. You have 75 minutes to complete
the exam. Answer all questions. The value of each question is indicated in parenthesis.
Answer each question
Problem Set #2
due Thursday, Feb 24, in class
(1) Go to the Harards Cluster Mapping Projects main site
(http:/clustermapping.com) and select an Clusters. The click on Cluster
Competitiveness across Regions and select the industry. For geog
(1) A demand function is given by Q=100-P.
Calculate the price elasticity of demand at Q=20
Answer: E=(dQ/dP) * (P/Q)
= -(1) * (P/Q)
at Q=20 P=80
Thus E= -(1) * (80/20) = -4
(2) A demand function is given by
Problem Set #5, Answers
(1) Two competing firms are each planning to introduce a new product. Each will decide
whether to produce Product A, Product B or Product C. They will make their choices at
the same time. The res
Problem Set #4, Answers
Due on Wednesday, Nov 16, 2010, in class
(1) A shop is located in the middle of Main Street, which is one mile long. Marginal
transportation cost is given by t=$80 per mile. The average production cost of th
PS #1, Suggested Answers
(1) Assume a firms marginal production of capital is equal to 20.Its marginal product of
labor is equal to 10 and the user cost of capital is 5. The firm is producing at its long-run
1. Rank Size Rule
Economists have observed a constant relationship between city size and its rank
(within a country/region)
Fir instance if the largest city has a population of 10 mil
CHAPTER 3, Part 2, Lecture Notes
II. COSTS IN CLUSTERS
in general: there are conflicting cost trends in clusters
labor cost is normally higher in clusters
other costs might fall
III. LOCALIZATION ECONOMI
Basics of Regression Analysis
Regression Analysis is aiming at quantifying a functional relationship between a
dependent variable (y) and one ore more independent variables (x). For instance,
assume the height
Monopoly and Horizontal Product Variety
A. Von Thnen Model and Land Rent
Let us start with a spatial model. Consider the basic Heinrich von Thnenmodel1,
where V denotes consumers WTP for the good, T the
Vertical Product Differentiation
A. Product Quality and Consumer Demand
Assuming that consumers can ascertain product quality and prefer higher over
lower quality, increasing quality will shift the inverse demand fu
Chapter 5: Urban Econ Growth
Normally, growth is measured in terms of per capita income, local GDP, etc.
Most of these measures, e.g., GDP, are the product of price and quantity
That is, growth may be driven by P or by Q.
To avoid the problem that growth
CHAPTER 2: Why do Cities Exist?
Heinrich von Thnen Basic Model (1826)
How far from the market will crop be grown (that is, how large is the reach of the citys
production cost is zero (MC=0)
only transportation cost (T) releva
CHAPTER 3: Why do Firms Cluster?
Question: why do firms that compete cluster?
Empirical evidence from Harvards Cluster Mapping Project (Michael Porter)
sign up and check their website
(a) share of national employment in the i
PS #6 (Due Friday, Dec 16, 5pm, slip under my office door!
DO NOT PUT INTO MY MAILBOX!)
(1) Read the text Experts and Price Distortion.
(a) What do the authors want to depict with the various ! figures?
(b) What is the main reason