a. The direct effect is an increase in supply of low-quality housing, which decreases the
equilibrium price. This spreads to the medium-quality market because fewer dwellings filter
down (increase in supply) and some consumers switch to
Chapter 15 - Housing Policy
5. Harmed by Vouchers?
a. You be [helped, harmed] by the voucher program because the program increases the
demand for housing, increasing its equilibrium price.
b. The harm from a voucher program will be relatively large if the
1. Consider a country with two regions that are separated by a mountain range. Initially,
there are no cities in this country. Suddenly a tunnel is bored through the mountain,
decreasing travel costs between the two regions. Under what conditions wil
You have 75 minutes to answer the following questions. Please, be neat, clear and concise. Good
Consider a region with a workforce of 12 million. The urban utility curve includes the following
1. Innovation & Growth Numbers
a. Point x: Utility = $72; workforce = 7 million. Point y: Utility = $60; workforce = 7 million.
City X moves downward along the negatively sloped part of the utility curve to a larger
population. City Y moves upward along t
How do you define a city? According to Census Geography, what are cities in economic
sense? Definition of urbanized area and metropolitan area.
Why do cities exist? What is comparative advantage, scale economies, and agglomeration
1. Collect data on employment for an urban area of your choice and for the entire US using
data from the Bureau of Labor Statistics web site. Create a table that shows employment
by major NAICS industries for year 1999 and the latest year available.
5. Gas Tax & Suburb vs. Central City
a. The firm will be willing to pay more for a site in the [city center, suburb] because the $300
savings in exchange cost exceeds the $200 premium for labor.
b. The firm will be willing to pay more for a site in the [c
Exercise 1: Q1 & 2
1. Initial value = R/r = 10,000/.05 = $200,000. With the tax
V = (r tV)/r, where t is the tax rate, and
V = R/(r+t) = 10,000/.08 = $125,000.
2. a. The bid-rent function with profits equal to zero is:
Profit = 0 = pQ TC = 1000 100(.