Code your name and student number on your computer-readable form, and note that this is Version A. Then, answer each of the following questions by marking your form with the letter corresponding to the best answer. There are 27 questions; you have 50 minutes.
 

1. From our treatment of economic base models, which is the best definition of a basic economic activity?

1. A high-order service.
2. A low-order service.
3. An activity that faces seasonal or cyclical demand.
4. An activity that uses raw (extracted or agricultural) inputs.
5. An activity whose demand is largely outside the region where the activity goes on.

1. for long-run (10-20-year) forecasts than for short-run forecasts.
2. in times of rapid change in the structure of an economy.
3. to model small, regional economies than large, national economies.
4. when basic sectors are identified by assumption than by survey of local producers.

1. Q^t+1
2. D Q_b
3. D Q_b (1 + a)
4. (1 + a)
5. a

1. It's the friction of distance, that one gets from specifying a spatial interaction model.
2. It's the location quotient for the basic sector.
3. It's the multiplier, that one gets from studies of similar regions.
4. It's the range of the service or good.
5. It's the ratio of nonbasic to basic activity in the region.

1. It’s equal to the change in the location quotient for the sector b in the region, over the time period.
2. It’s equal to the location quotient for the sector b in the region.
3. It’s the difference between Q^t andD Q_b.
4. It’s the multiplier, and one gets it from studies of earlier reactions of the regional economy to changes in basic employment.
5. We might get this information from the largest, basic employers in the region.

6. In what way are labor costs "immobile" when we're considering industrial location?

1. Labor costs do not vary across locations.
2. Low-wage labor is immobile, because the workers don't have the financial capability to move.
3. We're assuming international industrial location decisions, and international labor migration is very restricted.
4. When labor moves, it generally takes on the wage level of the destination region.

1. The ratio between (i) the product's importance as a proportion of a regional economy and (ii) its importance as a proportion of a larger (e.g., national) economy.
2. The weight of localized inputs to a product, per unit weight of the finished product.
3. The ratio of nonbasic to basic income from the sale of the product.
4. Labor costs as a proportion of total production costs for the product.
5. Labor costs as a proportion of total production costs for the product, divided by labor costs as a proportion of total costs for the overall economy.

1. Their economies of scale are high enough that they benefit from large, sparsely populated locations.
2. They benefit from local pools of specialized, highly skilled workers.
3. They have high material indexes, and are drawn toward their material input sources.
4. They have low material indexes, and are drawn toward the source of their inputs.
5. This minimizes the number of high-order central places.

1. An industry that employs a higher proportion of scientists and engineers than the average across industries.
2. An industry that ships most of its production outside the local (subnational) region in which it's located.
3. An industry that uses highly specialized equipment.
4. An industry with a lower-than-average material index.
5. An industry with low economies of scale.

1. When goods are made, some weight is generally lost.
2. The process of manufacturing generally adds value to inputs.
3. Some manufacturing processes make heavy use of ubiquitous inputs.
4. Finished products generally weigh more than their inputs.
5. Finished products generally weigh less than their inputs.

1. Reductions in unit costs of production as the designed size of production facility increases.
2. The ability to reduce internal bottlenecks by increasing the size of physical plant.
3. The cost benefits that production facilities gain from being located near similar facilities.
4. The proportion of a production facility's output that is exported from the region.
5. The usual fact that it costs more per unit to increase output.

1. Increases in geographic variation in wages.
2. Increases in labor-intensity of manufacturing.
3. Increases in transportation costs.
4. Reductions in labor-intensity of manufacturing
5. Reductions in transportation costs.

1. To minimize the location rent paid by a production facility, per unit of its output.
2. To minimize the location rent paid by a production facility.
3. To minimize the total costs of transportation.
4. To select a production location in the center of the largest possible market area.
5. To select a production location that minimizes the costs of assembling inputs, manufacturing a product, and getting it to market.

1. At the market.
2. At the source of the gross input.
3. Between the market and the source of the gross input.

1. patterns of land use based on activities' ability to pay location rents
2. the location of cities based on natural transportation routes
3. the relative location of the provision of services

1. The labor-orientation of the service.
2. The location of the central place relative to the source of the service.
3. The scarcity of the service.
4. The size of the hinterland required to contain enough people to support the provision of the service.
5. The source of the service.

1. The traffic principle calls for the direct transport routes between two central places of a given order to pass through a central place of the next lower order.
2. The traffic principle makes more sense when the cost of transportation is low.
3. The traffic principle recognizes the importance of transport-intensive manufacturing activity to the location of cities.
4. The traffic principle results in the least lower-order places per higher-order place.

1. The location rent at the optimal production location is so high that not all facilities can afford to locate there.
2. Production processes differ in their mix of material and labor inputs, and their benefit from agglomeration.
3. Profits are higher when production is dispersed.
4. Negative externalities (e.g., congestion) prevents all production facilities from finding it economic to locate in the same place.
5. Actually, because of agglomeration economies, most production for a given market is located at a single point.

1. Larger-scale production operations use grosser inputs and have a lower material index, and thus locate closer to the sources of the gross input(s).
2. The cost-minimizing production location is more likely to be away from material inputs and away from the market center, pulled to places where labor is less expensive or where agglomeration economies are available.
3. The size of the market area served from a single facility has increased.
4. Larger-scale production is more likely to substitute specialized machinery for skilled labor.
5. As the size of the market area has increased, the scale of production has generally increased.

1. By carefully reading the fictional newspaper article, we realized that the multiplier wasn’t large enough for us to consider the new facility to be basic employment for the state.
2. By comparing the size of the announced facility to the current size of the widget industry in the state, we were able to project the growth rate of the industry in the state.
3. We assumed that the new facility represented an addition to the state’s economic base, and asked whether the addition times the multiplier would generate enough additional state tax revenue to pay for the state’s expenditures to recruit the investment.
4. We calculated location quotients to determine the size of the multiplier, to estimate the total employment impact of the facility.
5. We used the company’s announcement to calculate the location quotient for the widget industry in the state, thereby determining that the industry was indeed basic.

1. 5.2
2. 3.6
3. 2.6
4. 1.6

1. the amount of non-basic activity (e.g., jobs) supported by a unit (e.g., a job) in the basic sector
2. the change in total employment as a result of changes in the basic sector
3. the change in total employment as a result of changes in the non-basic sector
4. the economic-base multiplier
5. the ratio of basic to non-basic activity in the region

1. To attract these labor-intensive activities away from low-wage labor locations.
2. To boost the construction industry, which is a basic economic activity.
3. To increase the ability of these companies to invest in the inputs upon which their success depends.
4. To increase the region’s economic multiplier by attracting any nonbasic economic activity.

1. A higher proportion of Boeing shareholders live in the Seattle region than in any other single region of the country.
2. Boeing has higher revenues per employee than average for the region.
3. Boeing sells its products to foreign airlines and governments.
4. Boeing’s revenues come from outside the region, but it buys some services in the region, and its workers spend their wages in the region.
5. To minimize its direct employment, Boeing indirectly hires 2.6 people (through temporary agencies and contractors) for every person it hires directly.

1. Laid-off workers are eligible for unemployment compensation, so they, too, can continue spending money.
2. Locally oriented companies that do lose business often postpone or avoid their own layoffs, hoping instead to ride out the slump.
3. Locally oriented, nonbasic employment generally declines at least as fast as basic employment, during an economic downturn.
4. Often, there are hiring booms under way in other industries, making the negative impact of the sector-specific decline harder to see.
5. Some employees facing layoffs will stay in the region and draw (and spend) income from retirement.

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copyright James W. Harrington, Jr.

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