A few questions about urban economic related to land use. .

The tradeoff between housing and commuting cost A: Segregation B: Integration 200 2(1) f MC (high income) [00 100 MC [high income] _ MB (high income] 50 L MCtlowuncomel MB (low income) Distance to center Distance to center 5 What happens to the above analyses when highincome earners drive to work while low-income earners take public transit? 5 Driving is faster than taking the public transit h Hint: it affects the marginal cost of commuting The tradeoff between housing and commuting cost An outward move of one mile from the inner city generates > Lower housing costs (benefits) > Higher commuting costs > The optimal location is found where the marginal cost equals the marginal benefits The tradeoff between housing and commuting cost > Highincome earners have higher commuting cost than lowincome earners (100 vs. 50) > Highincome earners consume more housing, so the marginal benefit from a housing price drop is also larger > MB (marginal benefit) curve is negatively sloped because the housing price is convex > Whether there will be segregation or integration depends on the relative difference of housing consumption v.s. commuting cost between the two groups