Reference no: EM131708090

Problem Set -

Q1. Which of the following tends to have the steepest bid-rent curve near a city center?

(a) Manufacturing

(b) Office

(c) Residential

(d) Agricultural

Q2. With factor substitution, the bid rent curve for the office sector

(a) becomes positive

(b) becomes less steep

(c) becomes steeper near downtown

(d) becomes steeper far away from downtown

Q3. Which of the following is not a cause of urban sprawl in the United States?

(a) the tax code subsidizes home ownership through mortgage

(b) energy is cheap

(c) plenty supply or land

(d) congestion is less a problem

Q4. Which one of the following is not how a gasoline tax reduce highway congestion?

(a) It increases the time needed to get to destination through highway

(b) It diverts people to cheaper public transit

(c) It encourages people to travel less frequently

(d) It increases car share

Q5. Which of the following statement about road capacity is not true?

(a) People respond to increases in road capacity by travelling more

(b) Optimal-size freeway should be free of congestion

(c) Construction cost is one of the main constraints to increasing road capacity

(d) In building a freeway, it is important to consider potential growth/decline in traffic

Q6. Suppose a city restricts the heights of residential structures. The maximum height is four stories, the height that would normally occur at a distance of five miles from the city center. Draw two residential bid-rent curves, one for the city in the absence of height restrictions and one with height restrictions.

Q7. Information about traffic volume, travel time, congestion externality, and demand for travel is given in the following table:

Traffic Volume (vehicles)	Increase in Trip Time (minutes)	Travel Time Per Driver (minutes)	Total Travel Time (minutes)	External Trip Cost ($)	Private Trip Cost ($)	Social Trip Cost ($)	Marginal Benefit (Demand)
100	12	0	0	0	3.2	3.2	22.12
200	12	0	0	0	3.2	3.2	19.64
300	12.6	0.01	3	0.3	3.26	3.56	17.16
400	14	0.018	7.2	0.72	3.4	4.12	14.68
500	16.2	0.026	13	1.3	3.62	4.92	12.2
600	19.2	0.034	20.4	2.04	3.92	5.95	9.72
700	23	0.042	29.4	2.94	4.3	7.24	7.24
800	27.6	0.05	40	4	4.76	8.76	4.76
900	33	0.058	52.2	5.22	5.3	10.52	2.28

(a) Calculate the social trip cost at each traffic volume and fill in the blanks in the table.

(b) What is the equilibrium traffic volume?

(c) What is the socially optimal traffic volume?

(d) What is the appropriate congestion tax?

Q8. In a column of The State Paper (Columbia, South Carolina) on April 5, 2004, columnist John Monk describes the efforts of motorcycle riders to defeat a proposed law that would allow police to issue $25 tickets to automobile drivers and passengers who are not wearing seat belts. The law would not apply to motorcycles, yet the bikers showed up in groups of a dozen or more, some dressed in full biker regalia, to urge legislators to reject the law. Is it sensible for bikers to oppose the proposed law? Please explain your answer.