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ECON 312 – Intermediate Macroeconomics | A+ Graded
Exam Questions, Solutions, Study Guide, and Complete
Material for 2025/2026
Consider the basic urban model from your textbook and a city that exists in
isolation (no migration in or out). Both consumers have identical income and
identical preferences that are represented by well-behaved indifference curves. If
Consumer A's dwelling is located further away from the CBD than Consumer B's
dwelling, then:
A) Consumer A requires a higher p so she can sell her house for more money to
pay for the longer commute
B) Consumer A requires a lower p in order to be on the same indifference curve as
Consumer B
C) Consumer B will consume more housing than Consumer A
D) Consumer A has a higher t than Consumer B
E) C and D
B)
An agricultural surplus is a ___________ condition for city formation
A) necessary
B) sufficient
C) necessary and sufficient
D) neither necessary nor sufficient
E) None of the above
A)
_________ caused the growth of company towns (towns dominated by a single
firm), but did not lead to massive cities
A) pecuniary agglomeration externalities
B) internal economies of scale in production
C) technological agglomeration externalities
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D) decreases in transportation costs
E) B and D
E)
Economists working in different companies, who meet up after work for a beer to
discuss new ideas and become more productive as a result, provide an example of
A) pecuniary agglomeration externalities
B) internal economies of scale
C) technological agglomeration externalities
D) constant returns to scale
E) decreasing returns to scale
C)
Consider the consumer choice model with quantity of housing on the horizontal
axis and quantity of consumption on the vertical axis. An increase in the price of
housing, holding other things constant, would be represented by
I. An inward parallel shift of the budget constraint
II. A flattening of the budget constraint
III. A steepening of the budget constraint
A) I only
B) II only
C) III only
D) I and II only
E) II and III only
C)
Consider the basic urban model from your textbook, and a city that exists in
isolation (no migration in or out). Suppose one effect of climate change is that it
causes more droughts that lower the profitability of farming by requiring more
irrigation. Which of the following is not an effect this will have on the city's spatial
equilibrium?
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A) The city will grow in area
B) Housing rents per square foot will fall throughout the city
C) Average housing unit size will decrease near the center
D) Building heights will decrease near the center
E) Average commute lengths (distance) in the city will increase
C)
The housing rent curve (residential bid-rent) is convex due to
I. consumer substitution
II. producer substitution
III. agglomeration externalities
A) I only
B) II only
C) III only
D) I and II only
E) II and III only.
D)
The housing price curve gets steeper as we move toward the center of the city
because
A) consumers substitute toward less housing when the price of housing rises
B) producers substitute toward using less land when the price of housing rises
C) consumers substitute toward less non-housing consumption when the price of
housing rises
D) producers substitute toward using fewer non-land inputs when the price of
housing rises
E) None of these is the reason the housing price curve gets steeper as we move
toward the center of the city
A)
Focus on countries that were early industrializers (such as those in North America
and Europe). If you compare cities in those countries from 100 years ago with
ECON 312 – Intermediate Macroeconomics | A+ Graded
Exam Questions, Solutions, Study Guide, and Complete
Material for 2025/2026
Consider the basic urban model from your textbook and a city that exists in
isolation (no migration in or out). Both consumers have identical income and
identical preferences that are represented by well-behaved indifference curves. If
Consumer A's dwelling is located further away from the CBD than Consumer B's
dwelling, then:
A) Consumer A requires a higher p so she can sell her house for more money to
pay for the longer commute
B) Consumer A requires a lower p in order to be on the same indifference curve as
Consumer B
C) Consumer B will consume more housing than Consumer A
D) Consumer A has a higher t than Consumer B
E) C and D
B)
An agricultural surplus is a ___________ condition for city formation
A) necessary
B) sufficient
C) necessary and sufficient
D) neither necessary nor sufficient
E) None of the above
A)
_________ caused the growth of company towns (towns dominated by a single
firm), but did not lead to massive cities
A) pecuniary agglomeration externalities
B) internal economies of scale in production
C) technological agglomeration externalities
,2|Page
D) decreases in transportation costs
E) B and D
E)
Economists working in different companies, who meet up after work for a beer to
discuss new ideas and become more productive as a result, provide an example of
A) pecuniary agglomeration externalities
B) internal economies of scale
C) technological agglomeration externalities
D) constant returns to scale
E) decreasing returns to scale
C)
Consider the consumer choice model with quantity of housing on the horizontal
axis and quantity of consumption on the vertical axis. An increase in the price of
housing, holding other things constant, would be represented by
I. An inward parallel shift of the budget constraint
II. A flattening of the budget constraint
III. A steepening of the budget constraint
A) I only
B) II only
C) III only
D) I and II only
E) II and III only
C)
Consider the basic urban model from your textbook, and a city that exists in
isolation (no migration in or out). Suppose one effect of climate change is that it
causes more droughts that lower the profitability of farming by requiring more
irrigation. Which of the following is not an effect this will have on the city's spatial
equilibrium?
, 3|Page
A) The city will grow in area
B) Housing rents per square foot will fall throughout the city
C) Average housing unit size will decrease near the center
D) Building heights will decrease near the center
E) Average commute lengths (distance) in the city will increase
C)
The housing rent curve (residential bid-rent) is convex due to
I. consumer substitution
II. producer substitution
III. agglomeration externalities
A) I only
B) II only
C) III only
D) I and II only
E) II and III only.
D)
The housing price curve gets steeper as we move toward the center of the city
because
A) consumers substitute toward less housing when the price of housing rises
B) producers substitute toward using less land when the price of housing rises
C) consumers substitute toward less non-housing consumption when the price of
housing rises
D) producers substitute toward using fewer non-land inputs when the price of
housing rises
E) None of these is the reason the housing price curve gets steeper as we move
toward the center of the city
A)
Focus on countries that were early industrializers (such as those in North America
and Europe). If you compare cities in those countries from 100 years ago with
