1-   What are the axioms of Urban economics?

2-   Which axiom of urban economics describes people’s willingness to live in less desirable

areas in cities? Explain.

3-   What determines the price of an apartment? Why the same apartment would be higher

in price in a city compared to a small village?

4-   What does the word marginal mean in economics?

5-   How would you define the following concepts?

-     The marginal return on education

-     The marginal social cost of a crime

6-   Why firms cluster?

7-   What is the difference between increasing return to scale and scale economies? 8-   Explain the difference between external and internal economies.

9-   Explain the difference between increasing return to scale in  Exchange and  increasing

return to scale in production

10- Explain the difference between localization economies and urbanization economies 11- What is the importance of agglomeration economies for firms?

12- What are the four types of agglomeration economies?

13- Dropping  the  constant  return  to  scale  in  production  assumption from  the  Backyard Production model allow for;

A-  variations in production opportunity cost, comparative advantages and specialization

B-   Decrease in cost of exchange

C-   Decrease in cost of production

D-  Increase in revenues

E-   Profit maximization

14- Trading cities develop mainly because of

A-  The growing population in the world

B-   Comparative advantage and scale economies

C-  The growing labor force in the world

15- Graph and explain the innovation payoff model. What does this model teach us?

16- Which of the following is one of the main reasons why cities exist?

A. To provide a place for people to live

B. To provide access to natural resources

C. To facilitate the exchange of goods and services

D. To provide a place for agriculture

Answer: C. Cities exist primarily to facilitate the exchange of goods and services.

17- Which of the following is a necessary condition for cities to exist?

A. A surplus of natural resources

B. A surplus of agricultural goods

C. A surplus of manufactured goods

D. A surplus of transportation options

Answer: B. A surplus of agricultural goods is necessary for cities to exist, as urban dwellers must obtain their food from rural workers.

18- What must city dwellers produce in order to exchange for food grown by rural workers?

A. Agricultural goods

B. Natural resources

C. Manufactured goods or services

D. Transportation services

Answer: C. City dwellers must produce manufactured goods or services to exchange for food grown by rural workers.

19- Which of the following is an example of urban production?

A. Farming

B. Mining

C. Manufacturing

D. Fishing

Answer: C. Manufacturing is an example of urban production, as city dwellers produce goods or services to exchange for food grown by rural workers.

20- Which of the following is an example of a positive externality in an urban setting?

A. Traffic congestion

B. Noise pollution

C. Well-maintained public parks

D. Air pollution from factories

Answer: C. Well-maintained public parks provide a benefit to the community beyond the immediate users of the park, making it an example of a positive externality.

21- Which of the following is a possible solution to address negative externalities from traffic congestion in a city?

A. Implementing a congestion toll

B. Building more highways

C. Providing free parking in the city center

D. Increasing public transit fares

Answer: A. Implementing a congestion toll can help to reduce the negative externalities associated with traffic congestion by internalizing the cost of driving during peak hours.

22- Which of the following is an example of a negative externality of urbanization?

A. decreased access to job opportunities

B. Improved access to healthcare services

C. Increased air pollution levels

D. Increased availability of affordable housing

23- Which axiom of urban economics suggests that the price of land and housing will adjust to ensure locational equilibrium?

A. Prices Adjust to Achieve Locational Equilibrium

B. Self-Reinforcing Effects Generate Extreme Outcomes

C. Externalities Cause Inefficiency

D. Production Is Subject to Economies of Scale

E. Competition Generates Zero Economic Profit

24- Which of the following is an example of an externality in urban economics?

A. The construction of a new housing development

B. The provision of public transportation

C. The pollution generated by a factory

D. The location of a retail store

25- Which axiom of urban economics suggests that firms may benefit from locating in close proximity to each other due to shared resources or knowledge spillovers?

A. Prices Adjust to Achieve Locational Equilibrium

B. Self-Reinforcing Effects Generate Extreme Outcomes

C. Externalities Cause Inefficiency

D. Production Is Subject to Economies of Scale

E. Competition Generates Zero Economic Profit

26- Which axiom of urban economics suggests that competition between firms will lead to zero economic profit in the long run?

A. Prices Adjust to Achieve Locational Equilibrium

B. Self-Reinforcing Effects Generate Extreme Outcomes

C. Externalities Cause Inefficiency

D. Production Is Subject to Economies of Scale

E. Competition Generates Zero Economic Profit

27- What is the marginal principle and how does it apply to urban economics? Use an example from the housing market to illustrate how the marginal principle can help explain the behavior of buyers and sellers.

28- How is comparative statics used in urban economics? Provide an example of how comparative statics can be used to analyze the effects of a policy change on a city's housing market.

29- Use a short run average cost and marginal cost graph to illustrate the concept of return to scale in urban economics. Label the X axes as Q and the Y axis as AC, MC. Explain how the graph illustrates the concept of return to scale.

30- A city's transportation authority is considering whether to invest in a new light rail system. The cost of the system is $1 billion, and the expected annual benefit to riders is $100 million. If the discount rate is 5%, should the transportation authority invest in the new system? Show your work.

31- Analyze the impact of scale economies on the development of trading cities. How does the interaction of firms in large urban centers contribute to economic growth?

32- Discuss the role of comparative advantage in the development of trading cities. How do the unique characteristics and resources of a city contribute to its ability to specialize in certain industries?

33- How did innovations contribute to the growth of factory cities?

a. They decreased the relative price of factory goods due to decreasing production costs.

b. They increased the relative price of factory goods due to increasing production costs.

c. They had no effect on the relative price of factory goods.

d. None of the above.

Answer: a. They decreased the relative price of factory goods due to decreasing production costs.

34- Which of the following best explains the relationship between the number of workers in a city and the total return to innovation?

a. The total return to innovation increases at a constant rate as the number of workers in the city increases.

b. The total return to innovation increases at an increasing rate as the number of workers in the city increases.

c. The total return to innovation increases at a decreasing rate as the number of workers in the city increases.

d. None of the above.

Answer: c. The total return to innovation increases at a decreasing rate as the number of workers in the city increases.

35- How does the total cost of living in a city change as the number of workers increases?

a. It remains constant.

b. It increases at an increasing rate.

c. It increases at a decreasing rate.

d. None of the above.