USP 15 UCSD Midterm Review

What is urban economics?

The study of economics in urban areas. This includes the factors making for the growth starting with towns and then metropolitan areas.

What is economics?

A social science concerned with the consumption of goods and services. Studies how people allocate scarce resources for production, distribution, and consumption, individually and collectively.

Market forces in the development of cities

The location decisions of firms/ households generate cities of different sizes and economic structures.

Land use within cities

location decisions of firms/households generate urban land use patterns.

Urban Transportation

Urban economics explores possible solutions to urban congestion problem

Urban Area

A densely settled geographic area with a minimum population of 2,500 people, a minimum density of 500 per square mile.

Metropolitan Area

A core area with substantial population, adjacent communities. It has a minimum population of 50,000 people.

Micropolitan Area

A smaller version of the metropolitan area. It has a concentration of 10,000 to 50,000 people.

Principal Party

The largest municipality in a particular metropolitan area.

Urban Area, Metropolitan Area, and City

Interchangeably refer to the economic city and not the political city.

Census Block

An area bounded on all sides by visible features (streets, streams, tracks) or invisible features (property lines/ political boundaries)

Urbanized Area

Densely settled core of census tracts and surrounding tracts that meet minimum population density requirements. (1,000 people per sq mile for core block groups and 500 per sq mile for surrounding blocks.

Urban Clusters

scaled-down version of urbanized area. Between 2,500 and 50,000 people.

Opportunity Cost

Choosing one thing over the other, or the second best alternative

Sunk Cost

Something that doesn't have the same value as you thought it would. Ex. Honda Center and Angel Stadium

Marginal Costs

The additional cost resulting from a one-unit increase in the activity.

Marginal Benefits

The additional benefit resulting from a one-unit increase in the activity.

Diminishing marginal returns

The same product over and over is less apealing

Nash Equilibrium

Environment has reached equilibrium when there's no pressure to change things.

Graphs ??

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Comparative Advantage

Used to predict the responses of decision-makers and markets to changes in economic circumstances.

Pareto Efficiency

Could we do better? Can you get better off without making someone else worse?

Complementary Goods

Goods that are usually bought together, like shoes and clothes.

Substitute Goods

Products that can replace other goods in case of absence

Inferior / Superior Goods

Price increases and demand still increases, (Apple)

Economies of Scale

You can buy more bulk product for cheaper because at one point the cost of production is the same.

Demand and Supply

self- explanatory

Elasticity

Price change causes great change in demand

Inelasticity

Price change causes little change in demand (cigarettes, no matter how much you increase the price people will still buy because they're addicted)

Agglomeration Economies

The benefits that come when firms and people locate near one another.

-Sharing intermediate input producers

-Tapping common labor pool

-Improving skills matching

-Gaining knowledge

Why do firms cluster?

-Sharing intermediate input producers

-Tapping common labor pool

-Improving skills matching

-Gaining knowledge

what best defines economics

the study of how people allocate scarce resources for production, distribution, and consumption

Which of the following is NOT one of the five axioms of urban economics?

a) Prices adjust to achieve locational equilibrium

b) Competition generates zero economic profit

c) Externalities cause inefficiency

d) Supply always creates its own demand

d) Supply always creates its own demand

Why are agglomeration economies important?

they lead to benefits such as shared inputs, knowledge spillovers, and labor pooling

What describe a factory city?

a city that forms due to technological innovations favoring mass production

which of the following is a benefit of firms clustering together?

a) Increased transportation costs

b) Access to a common labor pool and lower production costs

c) Higher property taxes

d) Reduction in externalities

access to common labor pool and lower production costs

What is knowledge spillover in urban economics

the spread of ideas and innovation between nearby firms

what does the rank-size rule predict about the size of cities?

cities with more educated populations tend to grow faster

the bid rent model shows:

how land rents decrease as distance from the city center increases

Which of the following is true regarding urban scrawl?

a) It reduces housing prices in city centers

b) It refers to the spread of urban development into previously rural areas

c) It leads to increased density in downtown areas

d) It is encouraged by zoning laws

it refers to the spread of urban development into previously rural areas?

What is a key reason people choose neighborhoods?

the quality of local public goods, such as schools and safety

Racial and economic segregation in neighborhoods are primarily driven by:

preferences and historical factors

Urban growth boundaries (UGB) are used to

limit the expansion of urban areas to control sprawl

what is the market equilibrium in urban real estate

the point where supply equals demand at a particular price

elasticity in urban markets refers to

how responsive the quantity remanded is to price changes

Which of the following is a benefit of labor pooling in urban areas?

firms can access a shared labor market, reducing hiring and training costs

knowledge spillover is most beneficial in

cities where firms are located close together

the monocentric city model assumes that

cities are centered around a single core, such as central business district

what has led to decentralization and urban sprawl

transportation innovations

what are the diminishing returns of clustering in an industry?

as more firms cluster in a city, productivity increases at first, but eventually, congestion, higher costs, and inefficiencies may limit further benefits

what is the relationship between city size and agglomeration economies

as cities grow, agglomeration economies can diminish due to congestion and increased costs

what is labor pooling and why is it beneficial to employers and workers?

labor pooling refers to when firms have access to a shared labor market, reducing hiring costs for employers and providing workers with more job opportunites and negotiation power

what is a metropolitan area according to US census definitions

an area with a population of 50,000 integrated with a core population

which concept describews a situation where no individual can be made better off without making someone worse off?

pareto efficiency

which of the following best describes elastic demand?

demand that changes significantly with small changes in price

what does the marginal principle of supply and demand state?

firms will produce and sell goods up to the point where the marginal benefit equals the marginal cost

what are agglomeration economies

the clustering of firms and industries to exploit shared benefits such as labor pooling and reduced transportation costs

what percentage of the US population lived in large metropolitan areas with over 5 million people in 2010

25%

which of the following factors is not a key component of urban economics

environmental law enforcement

what is opportunity cost in urban economics

the value of the next best alternative that is forgone when a decision is made

what is an example of self-reinforcing effects in urban areas?

initial growth in a city that attracts more people and firms, leading to even faster growth

how does the concept of offering higher wages than rural areas

cities specialize in certain goods and services where they have a lower opportunity cost, leading to trade and growth

what type of city is more likely to form due to geographic advantages in trade?

trading city

what is the result of a shortage in a real estate market?

prices rise and demand exceeds supply

what does a surplus in the real estate market indiciate?

there is more supply than demand, leading to lower prices

which of the following is an example of a choice variable in real estate development?

building height which is influences by changes in the price of steel

what is the effect of a change in the price of wood (as an equilibrium variable) on housing prices

higher wood prices increase housing costs as developers pass the cost to buyers

what population range defines a micropolitan area according to US Census?

10,000 to 50,000

what are agglomeration DISECONOMIES

the negative effect of over clustering in cities, such as congestion, higher costs, and inefficiences

what is an example of a single industry cluster (localization economy)

dalton, georgia's dominance in the carpet industry