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Urban Economics Assignment 1

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Urban Economics Assignment 1 Student Name: HAO LI Student Number: 997456097 Chapter 2 1. a) The gains from trade are +1 shirts for North and +1 shirts for South. b) A trading city won’t develop because the opportunity cost of exchange for North is 2 shirts, which exceeds the gross gain of 1 shirt. c) Suppose an innovation in transportation decrease the transaction time. A trading city will develop if the transaction time is less than 15 minutes because the opportunity cost of exchange is 1 shirt for the North and 1/4 shirt for South. 2. a) The labor used in transporting products from production sites to trading firms will decrease because the transmitter, with 0 MC, replaces with the wagons. b) The volume of trade in the region will…show more content…
b) The stem of the martini glass is 1/4 loaf and the slope is 1/8 lad per mile, so the market area is 6 miles on each side because 1/4+6/8=1 c) The horizontal cost of home production is now at 1/2 loaf instead of 1 loaf. the market area is 2 miles on each side because 1/4+2/8=1/2. 11 a) Most breweries locate close to their customers because beer production is a weight-gaining activity because breweries add local water to other ingredients. Brewing is a market-oriented industry, so it locates close to its consumers to economize on transport cost. b) Most wineries locate close to their input sources because wine production is a weight-losing activity and the grapes are costly to transport because of the spoilage. Firms in the materials-oriented industry locate close to input suppliers to economize on transport cost. Chapter 3 2 a) In an isolated site, the wage is variable and the firm’s workforce is fixed because the supply of labor perfectly inelastic. b) In a cluster, the wage is fixed and the firm’s workforce is variable because the supply of labor is perfectly elastic. c) Number 'of 'Workers ' Number 'of 'Workers ' 3 a) 40 30 20 50 40 Number 'of 'workers ' 60 Number 'of 'workers ' b) During good time, the benefit of being in the cluster as opposed to being isolated is $550, compute as (40-30)* 50+(1/2)*(40-30)*10. c) During bad time, the benefit of being in the cluster as opposed to being isolated is $450, compute as
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