USP 15 FINAL REVIEW (latest update)
questions and answers
Why do cities exist? - correct answer ✔✔Cities exist because individuals are not self-sufficient.
Labor specialization allows us to produce and consume more stuff
What are the 4 agglomeration economies? - correct answer ✔✔1. Sharing immediate input
producers (input sharing)
2. Tapping a common labor pool (labor pooling)
3. Improving skills matching (skills matching)
4. Sharing knowledge (knowledge spillover)
Sharing immediate input producers (input sharing) - correct answer ✔✔- Something produced
by one firm and used by a second firm as an input to production process
- Locate close to one another to reduce input costs
Tapping a common labor pool (labor pooling) - correct answer ✔✔- Reduces 'production cost'
by enabling more efficient transfer of skilled employees from one firm to another (direct
correlation to production cost by generating lower cost per employee)
- Share pool of workers to reduce costs of transferring workers from unsuccessful firms to
successful firms
- Clusters facilitate transfer of workers for lower search and relocation costs (less about wage
and more and opportunity)
Improving skills matching (skills matching) - correct answer ✔✔- Typically generate higher
wages for employees (has a direct correlation to employee wages)
- Workers and firms are not always perfectly matched and mismatches require expensive
training to better match workers and jobs
, - Key Assumptions: not all equally skilled, training cost, firm skill requirements, economies of
scale in production
Sharing knowledge (knowledge spillover) - correct answer ✔✔- Provides incentives for firms to
cluster as innovation leads to lower costs and higher profit (basically meaning that there is
greater impact with sharing knowledge
- Could occur w/in industry (localization economy/single industry) but often occurs in cross
industry boundaries (urbanization economies/multiple industries)
Economic Base Analysis - correct answer ✔✔Economic Base Theory suggests that basic sector
industries increase the overall net worth of an economic region.
The region grows by the worker plus the number of other workers required to meet that basic
sector workers' needs (there must also be a number of non-basic workers required to meet the
needs of the non-basic employers). This all explains the multiplier effect, there will be
consequences in changes of total employment, which includes constant wage and constant
labor productivity. Basic sector growth implies increase in revenue stream coming to city.
What shifts the labor supply? - correct answer ✔✔- Removing public amenities (i.e. parks)
- Increase in residential public services
- Change in residential taxes
What causes the supply curve to shift to the right? - correct answer ✔✔- Amenities
- Residential Public Services
What causes the supply curve to shift to the left? - correct answer ✔✔- Disamenities
- Residentials Taxes
questions and answers
Why do cities exist? - correct answer ✔✔Cities exist because individuals are not self-sufficient.
Labor specialization allows us to produce and consume more stuff
What are the 4 agglomeration economies? - correct answer ✔✔1. Sharing immediate input
producers (input sharing)
2. Tapping a common labor pool (labor pooling)
3. Improving skills matching (skills matching)
4. Sharing knowledge (knowledge spillover)
Sharing immediate input producers (input sharing) - correct answer ✔✔- Something produced
by one firm and used by a second firm as an input to production process
- Locate close to one another to reduce input costs
Tapping a common labor pool (labor pooling) - correct answer ✔✔- Reduces 'production cost'
by enabling more efficient transfer of skilled employees from one firm to another (direct
correlation to production cost by generating lower cost per employee)
- Share pool of workers to reduce costs of transferring workers from unsuccessful firms to
successful firms
- Clusters facilitate transfer of workers for lower search and relocation costs (less about wage
and more and opportunity)
Improving skills matching (skills matching) - correct answer ✔✔- Typically generate higher
wages for employees (has a direct correlation to employee wages)
- Workers and firms are not always perfectly matched and mismatches require expensive
training to better match workers and jobs
, - Key Assumptions: not all equally skilled, training cost, firm skill requirements, economies of
scale in production
Sharing knowledge (knowledge spillover) - correct answer ✔✔- Provides incentives for firms to
cluster as innovation leads to lower costs and higher profit (basically meaning that there is
greater impact with sharing knowledge
- Could occur w/in industry (localization economy/single industry) but often occurs in cross
industry boundaries (urbanization economies/multiple industries)
Economic Base Analysis - correct answer ✔✔Economic Base Theory suggests that basic sector
industries increase the overall net worth of an economic region.
The region grows by the worker plus the number of other workers required to meet that basic
sector workers' needs (there must also be a number of non-basic workers required to meet the
needs of the non-basic employers). This all explains the multiplier effect, there will be
consequences in changes of total employment, which includes constant wage and constant
labor productivity. Basic sector growth implies increase in revenue stream coming to city.
What shifts the labor supply? - correct answer ✔✔- Removing public amenities (i.e. parks)
- Increase in residential public services
- Change in residential taxes
What causes the supply curve to shift to the right? - correct answer ✔✔- Amenities
- Residential Public Services
What causes the supply curve to shift to the left? - correct answer ✔✔- Disamenities
- Residentials Taxes
