1. Recall the following quote from van Nieuwerburgh and Weill (2010) which was in the survey at the beginning of the term: House price diHerentials between metropolitan areas compensate for the income diHer ential of the marginal, lowest ability household in the location, making that household indifferent between staying and moving to the next best metropolitan area. Households also live in smaller and more expensive quarters if they choose to work in higher-income metropolitan areas. Lastly, higher-income metropolitan areas have on average a larger housing stoclr and a larger workforce. These authors were describing results which hold across cities and their ndings are consistent with the so-called Law of Urban Growth. Briey describe the extent to which the monocentric city model which we have studied is consistent with these observations