Urban Economics and Silicon Valley

PART A: Answer any 5 of the questions A.1 – A.8. Do not answer additional questions. This part is worth 15% of the exam.

 

Briefly define and give a specific example of:

A.1. Scale economies in connection with urban economics (i.e., related to land use, housing, or firm location)

A.2. Pecuniary agglomeration economies

A.3. Technological agglomeration economies

A.4. Retail agglomeration economies

A.5. Externalities

A.6. ceteris paribus assumption

A.7. A numeraire good

A.8. An efficient allocation of resources

PART B: Answer any 3 of the questions B.1 – B.7. Do not answer additional questions. This part is worth 30% of the exam.

B.1. Derive (using graphical or algebraic methods) the housing-price curve in the standard [textbook] case.

B.2. What conclusions about the shape of the housing price curve, the slope of the housing price curve, and total expenditures on housing (total rent) are supported by the Simple Urban Model?

B.3. Explain how the edge of the city is determined in the Simple Urban Model.

B.4. What is the effect of a higher t (marginal cost of commuting) on the allocation of land to housing and farming in Brueckner’s Simple Urban Model?

B.5. What is the effect of a higher t (marginal cost of commuting) on the price of housing in Brueckner’s Simple Urban Model?

B.6. Why do the poor reside closer to the CBD in Brueckner’s Simple Urban Model?

B.7. Contrast land-weighted density with population-weighted density. What causes a difference between the density measures? Which measure is more accurate? Why?

PART C: Answer only 1 of the questions C.1 – C.2. Do not answer additional questions. This part is worth 55% of the exam.

 

C.1. According to Glaeser & Gyourko, “How Should Housing Affordability Be Measured?”

C.2. What caused the decline of his birthplace, Newark, NJ, and other East-Coast cities, according to Richard Florida? What defined the economy of these cities? What ethnic groups comprised these cities? What changes in ethnic composition has ensued because of gentrification? What causes “gentrification” according to Florida?

What, according to Florida, are the five dimensions of the New Urban Crisis? Explain why these dimensions are important, according to Florida.

Textbooks

Jan K. Brueckner (B), Lectures on Urban Economics, MIT Press (2011) ISBN: 978-0-262-01636

Richard Florida (F), The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class and What We Can Do About It, Basic Books (2018) ISBN: 978-1541644120

Edward Glaeser and Joseph Gyourko, Rethinking Federal Housing Policy: How to Make Housing Plentiful and Affordable, AEI Press (December 16, 2008) ISBN-13: 978-0844742731 (PDF: http://www.aei.org/wpcontent/uploads/2014/03/rethinking-federalhousingpolicy_101542221914.pdf)