5. Consider a monocentric model with fixed housing unit h and the utility of residents u=c,where c is the consumption of the composite goods. The budget constraint of each residentliving at distance d from the CBD is c + ph = w-dt, where w is wage, p is housing rental rate,t is the unit commuting cost in distance. The city is open and free migration in and out. Theexternal utility they obtain out of the city is ū= 10. The rental rate on agricultural land is pA.(a) Illustrate why the consumption of residents living in all parts of the city will beequalized.(b) Derive the housing rental rate (p) as a function of d, distance from the CBD, What isthe slope? Draw a figure with p at the y-axis and d at the x axis.(c) Discuss how the boundary of the city is determined in this model, how would theboundary of the city respond to wage w and commuting cost t?

The objective of the question is to understand the monocentric city model and its implications on…

Answered: 5. Consider a monocentric model with…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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suppose the government of a desert community wants to punish excessive water useage, where "excessive" is defined as any usage greater than 100 gallons/week. to do this, the government paces a flat $100 income tax on anyone who consumes more than 100 gallons/week of water in any given week (so this tax could theoretically be levied 52 times per year). people who use less than 100 gallons of water each week will not face this $100 special tax. For these problems, consider the decisions between water consumption, X(sub)w and consumption of a composite good, X(sub)c, where P(sub)w =$2/gallon and the composite good's price is numeraire. suppose michael lives in this desert community and has a weekly income of $1000. 1. graphing michels budget contraint over (X(sub)w , X(sub)c) bundles, what is the slope of his budget conraint for bundles containing MORE than 100 gallons of water? 2. What is the slope of michaels budget constraint at the point (X(sub)w, X(sub)c)=(100,750)? 3. what is the…
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