ECON 370 Midterm: ECON 370 2015 Midterm and Answers
Document Summary
This makes answers shorter and more precise: land rents are difficult to determine near the centers of modern large cities. What is a land rent function: the basic monocentric city model predicts that higher income households will reside farther from the city center, than do lower income households. Comment on how this prediction comes about and why reality contradicts the prediction in many cases: my publisher indicated in a blurb that expensive cities lead to high wage residents being in these cities. We focused on the opposite case in class. Discuss: a standard criticism of the monocentric city model is that it only captures places (now very rare) with all jobs in the center. We provided a fix for this apparent defect of the model. Discuss: production functions with fixed coefficients (as in von thunen"s basic model) lead to equilibria with very simple land rent functions.
