Question 1.2 (4 points)

Suppose all households prefer to live near blue households. Consider a mixed neighborhood equilibrium: neighborhood 1 is 75 percent blue and 25 percent green; neighborhood 2 is 75 percent green and 25 percent blue. A green household will be indifferent between neighborhood 1 and neighborhood 2 because [income / lot size /land price/ utility] is lower in [neighborhood 1/ neighborhood 2].

Question 1.3 (8 points)

Suppose all households prefer to live near blue households. Perfect integration is not a stable equilibrium if the [blue / green] bid premium curve is steeper than the [blue / green] bid premium curve. Perfect integration is a stable equilibrium if the [blue / green] bid premium curve is steeper than the [blue / green] bid premium curve.

Question 1.4 (4 points)

The employment multiplier is defined as the change in [total / export / local] employment per unit change in [total / export / local] employment.

Question 1.5 (4 points)

A decrease in a city's crime rate will shift the labor [demand / supply] curve to the [left / right].

Question 1.6 (2 points)

If an additional 150 export jobs increases total employment by 450 jobs, the employment multiplier is [0.33 / 3.0 / 2.0 / 4.0].

Question 1.7 (6 points)

The employment multiplier of a large city is [larger / smaller / the same as] the employment multiplier of a small city because the large city has [more / less] consumers to support [more / less] variety of goods and services.

Question 1.8 (4 points)

Suppose the wage elasticity of labor supply is 5.0 and the wage elasticity of labor demand is 2.0. A 21 percent increase in labor demand will [increase / decrease] the equilibrium wage by [7.0 / 3.0 / 0.14 / 0.33] percent.