Urban land rent and use 2

Question 1

Logical structure of the monocentric model (households)

Answer 1

• distance from CBD UP => housing price & rent DOWN
• housing price & rent DOWN => housing consumption UP

Question 2

Logical structure of the monocentric model (developers)

Answer 2

• distance from CBD UP => building rent DOWN
• building rent DOWN => building height DOWN

Question 3

causes of sprawl

Answer 3

• higher income => larger consumption of land & lower density
• low cost of travel allows workers & shoppers to live relatively long distance from jobs, shops and destination for social interaction

Question 4

Inter city comparison (population size)

Answer 4

• increase in population size
  => excess demand for housing
  => increases in price psf at all locations in the city
  => consumers choose smaller dwelling size
  => increases in housing revenue make developers compete more
  => land rent increase at all locations
  => lead to constructing more taller buildings at all locations
  => higher population density

Question 5

Inter city comparison (transportation cost)

Answer 5

• increase in transportation cost
  => suburban commuters want to move toward CBD
  => increases in price psf at all locations in the city
  => increases in housing revenue nearby CBD make developers compete more in city center, less in suburban
  => land rent increase around CBD, less in suburban
  => taller buildings around CBD, lower buildings in suburban
  => higher population density, city size decreases

Question 6

impact on bid-rent curve for low income households

Answer 6

• travel cost has large impact on disposable income
• house prices must rapidly decline to offset loss
  => steep bid-rent curve

Question 7

impact on bid-rent curve for high income households

Answer 7

• travel cost have low impact on disposable income
• house prices must decline less to offset loss
  => less steep bid-rent curve