I. Explain Von Thunen’s theory of differential rent based on accessibility. Consider the basic case of a single agricultural good. Be sure to make clear the key assumptions and major results. Go on to explain how the model works when there are two agricultural goods.
II. What are the major assumptions of the monocentric city model? What are its major predictions? Which of the assumptions do you find most doubtful? Discuss what implications, if any, the failure of these assumptions has on the predictions of the model.
III. Describe the implication of income differences for the basic monocentric city model? What are the key factors in the model that determine where lower and higher income households will live? Discuss this prediction in the U.S. context.
IV. Discuss the forces that have promoted job decentralization in U.S. metropolitan areas. Explain the negative externalities associated with job decentralization. Assuming, as suggested in class, that the private gains and negative externalities/public costs of job decentralization are of approximately equal magnitude, what policy interventions, if any, do you support.
V. Discuss the Becker-Murphy model of residential sorting. Be sure to explain the basic assumptions of the model. Under what circumstances is a neighborhood in equilibrium? Under what circumstances is a neighborhood stable?
VI. Explain the pros and cons of introducing an urban growth boundary. In your answer be sure to make clear the objective of such a boundary and its likely ramifications. Do you support the introduction of such a boundary in the Chicago urbanized area? Discuss.
VII. Use the case of traffic congestion to explain how we can actually measure the monetary value of an externality. Do you think the government should charge drivers for imposing this externality? Discuss.