example essay questions

Question 1

discuss the implications of spatial equilibrium in the monocentric model

Answer 1

1. economists who developed the model
2. the model structure, what each letter means
3. define spatial equilibrium and implications
4. what does the spatial equilibrium mean for p, q, x, t, density, height etc.
5. draw diagram for spatial equilibrium
6. rent price diagram - distance relation

Question 2

discuss how the monocentric city model can be used to distinguish the type of consumer that lives near the CBD

Answer 2

• 𝑦𝑖 − 𝑡𝑖𝑥 = 𝑝𝑞 + c
• max utility function to get, marginal utility gained from dwelling size = price times utility gained from consumption
• It can be shown that, as long as 𝑦𝐻 − 𝑡𝐻𝑥 > 𝑦𝐿 − 𝑡𝐿𝑥, for any x, then 𝑞𝐻 𝑥 > 𝑞𝐿 𝑥 holds
• high income value time more
• high income also consume more land
• bid-rent function: relation between the price the individual is willing to pay for
  land and the distance of the plot of land from the CBD
• In equilibrium, a plot of land must be occupied by the
  individuals that have the highest willingness to pay for it
• So, if at 𝑥 hat, 𝑝𝐻 𝑥 is steeper than 𝑝𝐿 𝑥 , it must be that the high income types outbid the low income ones at all locations x closer to the CBD than x hat
• draw rich in centre graph
• show that rich value time more than low income
• europe vs america example

Question 3

discuss a cordon toll, as shown in the 3 island model

Answer 3

• toll on midtown bridge only, SB policy