Consider a simple monocentric city model in which households are all identical, have income 3;, and utility function: U(q, z) = (10210 0 yl) and
Consider a simple monocentric city model in which households are all identical, have income 3;, and utility function: U(q, z) = (10210 0 yl) and so attain a higher utility level than Type One house- holds (g > 6:1). Use your Alonso-Muth condition from part c. to argue that the house price gradients for the two households are not the same, and that therefore their pricing functions must cross. What does this tell us about the location of the different types of household in the city? Explain briey
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance