1.  Which is the best definition of economic rent?
a) the cost of providing the services of land
b) the lowest rent that a landowner can accept and recover his/her costs
c) the lowest rent that a landowner will accept
d) the monetary return from the use of land after the costs of production and marketing have been deducted
e) the portion of rent (or mortgage) payments that results from interest expense

2. What are externalities?
a) activities for which the cost of transportation is not very important in determining optimal location
b) benefits (or costs) of a firm’s actions that are not captured (or borne) by the firm that is responsible for them
c) exports of goods or services from the region
d) information that is useful to production
e) production that occurs outside of firms

3. What are economies of scale?
a) increases in demand as the price of production falls
b) increases in the marginal cost of production
c) reductions in unit costs of production as a result of larger designed scale of output within the firm
d) reductions in unit costs of production as a result of proximity or density of economic activity
e) the relationship between scale and transport costs

4.  The “rank-size rule” is a common empirical relationship between
a) the order of a central place and the number of different functions within it.
b) the order of a central place and the size of its hinterland.
c) the population rank of cities and their population sizes.
d) the range and the threshold of a central-place service or good.
e) the size and density of population in a region.

Questions 5-8 refer to the figure appearing on the test page, which has two axes (rent and distance), and two, downward-sloping, diagonal lines between the axes:  AD and BE.  Points A and B are on the vertical (rent) axis;  A>B.  Points D and E are on the horizontal (distance) axis;  E>D.  Thus, line AD is steeper (has a higher rent-intercept and a smaller distance-intercept) than line BE.  The two lines intersect at C, which represents a distance of C.

5.  In the figure below, what is the spatial margin of cultivation?
a) A
b) B
c) C
d) D
e) E

6.   In the figure below, what is the point of transference between crops AD and BE?
a) A
b) B
c) C
d) D
e) E

7.  In the figure above, which crop has higher transport costs, in terms of the costs of transporting an acre’s worth of output a mile?
a) AD
b) BE

8.  In the figure above, which crop is grown closer to the market?
a) AD
b) BE
 
 

9.  Which of the following does the text not associate with subsistence agriculture?
a) hired labor
b) labor intensity
c) limited exchange of commodities for cash or other commodities
d) production mainly for consumption by the growers’ household
e) small scale

10.  What is the key, distinguishing feature of commercial agriculture?
a) Agricultural products are sold for cash and consumed away from the farm.
b) Agriculture is a transitional land use, awaiting the increased values that urbanization brings.
c) Agriculture occurs in rural areas.
d) Planting occurs in the fall, and the moisture from winter snow helps fertilize the seed.
e) Planting occurs in the spring;  crops are harvested in the fall.

11.  Which of the following is not a characteristic of commercial agriculture?
a) Farms are extremely large, and the trend is toward even larger farms.
b) Large farms, fertilizer and feed producers, food producers, and food distributors are often owned by the same large, vertically integrated companies.
c) Machinery, fertilizers, and high-yielding seeds are used extensively.
d) Price ceilings are set by the government, resulting in production shortages.
e) The populations supported by agriculture are largely urban.

12.  Which of the following is not a tendency of American farming during the past 100 years?
a) drastically increased supply
b) falling prices
c) government measures to reduce prices of agricultural products
d) moderately increased demand
e) reduced labor employment

13.   What determines whether a particular good or service is offered in a low-order central place?
a) the degree of external economies entailed in the production of the good or service
b) the location of the central place relative to the source of the good or service
c) the size of the hinterland required to contain enough people to support the provision of the good or service
d) the scarcity of the good or service
e) the source of the good or service

14.  Why might we expect a geographic arrangement of central places according to the traffic principle rather than the marketing principle?
a) The marketing principle would result in traffic congestion, given the greater total transport of market-oriented goods.
b) The traffic principle calls for direct transport routes between two central places of a given order to pass through a central place of the next lower order.
c) The traffic principle recognizes the importance of transport-intensive, manufacturing activity to the location of cities.
d) The traffic principle results in fewer lower-order places per higher order place, which is closer to reality.
 
 

Questions 15-21 refer to the algebraic model below.

R = E (p - a) - Efk
where
R = rent at a particular point, in dollars/acre
E = output, in tons/acre
p = market price, in dollars/ton
a = production cost, in dollars/ton
f = transport cost, in dollars/ton-mile
k = distance from the market center to the point in question, in miles.

15.  This model yields the economic rent at a given point for a given land use, only on the assumption that
a) all land uses are urban.
b) all land uses have the same intensity.
c) population is evenly spread across the landscape.
d) there is competition among potential users of each piece of land.
e) there is more than one possible land use.

16.  Using this model, if we assume that a wheat farmer 20 miles from the market obtains a yield of 1,000 tons/acre, has production expenses of $50/ton, transport expenses of $1/ton-mile, and receives a market price of $100/ton at the central market, the location rent accruing to 1 acre of the farmer's land is:
a)  $10,000
b)  $15,000
c)  $30,000
d)  $60,000
e)  $200,000

17.   If everything above remains the same, except that the cost of transport increases to $2/ton-mile, what would the location rent per acre be?
a)  $10,000
b)  $15,000
c)  $30,000
d)  $60,000
e)  $200,000

18.  What is the economic rent that accrues to a location at the market?
a) E
b) E (p-a)
c) - Ef
d) Efk
e) p-a

19.  What is the cost of transporting output to market?
a) E
b) E (p-a)
c) - Ef
d) Efk
e) p-a

20.  What is the slope of a line that describes how economic rent changes with distance from the market?
a) E
b) E (p-a)
c) - Ef
d) Efk
e) p-a

21.  What is the measure of the intensity of land use?
a) E
b) E (p-a)
c) - Ef
d) Efk
e) p-a
 

22.  In the second exercise, you estimated the amount of retail sales you’d get in a supermarket at a particular location j, by allowing the computer to compute the sales that the store should get from customers in each of several zones i.  You told the computer the total household income in each zone, and the proportion of total income spent on groceries.  The computer computed the distance from each i to j, and the consequent level of sales (S) expected from all the zones in the market area of the supermarket, as
S_j  =  k (sum( C_i / d_ij^a ))
where C_i = (household income in i) (proportion of income spent on groceries).  As the population of the city increases, what should happen to the sales you expect in your store?
a) should decrease
b) should increase

23.  In the second exercise, you had to make an assumption about the number of census tracts in your market area.  As you increase the number of tracts, what happens to the proportion of the market area you expect to come to your store?
a) It decreases.
b) It increases.

24.   If we divide a region’s economy (Q) into basic activities (Q_b ) and non-basic activities (Q_n ), such that Q = Q_b + Q_n , then what’s Q_n /Q_b = a ?
a) the amount of non-basic activity (e.g., jobs) supported by a unit (e.g., a job) in the basic sector
b) the change in total employment as a result of changes in the basic sector
c) the change in total employment as a result of changes in the non-basic sector
d) the economic-base multiplier
e) the ratio of basic to non-basic activity in the region

25.  Which of the following is not a way to determine which economic activities in a region are part of its economic base?
a) Ask the firms in the region how much of their production is sold to entities outside the region.
b) Assume that the output of certain sectors is export-oriented, and other sectors provide goods and services for residents of the region.
c) Find the ratio of public- to private-sector employment in the region.
d) Identify the sectors that produce a lot more than the region is likely to use internally.

26.  What is a location quotient?
a) employment in a particular industry as a proportion of total employment
b) the ratio of public- to private-sector employment in a region
c) the ratio of the basic to non-basic employment in a region
d) the ratio of the proportion of an economic activity in a region’s economy to the proportion of that activity in the nation’s economy
e) the total weight of localized inputs to a production process, divided by the weight of the resultant output

27.  Which stage of the industry life cycle is characterized by emphasis on design and commercialization of the product?
a) fixed
b) maturity
c) old age
d) organization
e) youth

28.  Which stage of the industry life cycle is associated with production decentralization at inter-regional and international scales?
a) fixed
b) maturity
c) old age
d) organization
e) youth
 
 

Questions 29-33 refer to the algebraic model below.

R_i = D (r - c) - Dtd_ic
where
R_i = rent or price of urban land at a particular point i, in dollars/acre, for a specific activity
D = land-use density, in rentable sq.ft./acre
r = revenues generated per sq.ft. of the activity
c = costs of generating that revenue, in dollars/sq.ft.
t = transport cost, in dollars/sq.ft.-mile:  think of this as the people who work, live, school, or shop there per sq.ft. of space, times the transit cost per person-mile = people/sq.ft. X $/person-mile = $/sq.ft.-mile
d_ic = distance from the point in question to the point of maximum accessibility, in miles.

29.   What is the profit to be made per sq.ft. of rented space?
 a) - Dt
b) D
c) D (r-c)
d) Dtd_ic
e) r-c
 
30.   What is the profit to be made per acre of land?
 a) - Dt
b) D
c) D (r-c)
d) Dtd_ic
e) r-c
 
31.  What is the slope of the “bid-rent” line for a particular activity?
 a) - Dt
b) D
c) D (r-c)
d) Dtd_ic
e) r-c
 
32.  What is the cost to transport the people (and goods) that have to get to and from the site every day?
 a) - Dt
b) D
c) D (r-c)
d) Dtd_ic
e) r-c
 
33.  What happens if t falls?
a) D increases.
b) Each land use becomes denser.
c) Land uses that cannot pay increased rents are no longer present.
d) r-c falls.
e) The boundaries of the urban area expand.
 
 

34.  The concentric-ring model (or pattern) of urban land uses reflects
a) differences in accessibility and, therefore, in land values along transport lines radiating outward from the city center.
b) the different densities of urban land uses.
c) the possibility that suburban districts can have commercial activities.
d) the rising cost of transportation over time.
e) the tension between urban and agricultural land uses.

35.  The sector model (or pattern) of urban land use reflects
a) differences in accessibility and, therefore, in land values along transport lines radiating outward from the city center.
b) the different densities of urban land uses.
c) the possibility that suburban districts can have commercial activities.
d) the rising cost of transportation over time.
e) the tension between urban and agricultural land uses.

36.   The spatial mismatch theory attempts to explain
a) “edge cities” — suburban employment centers.
b) location of technology-intensive manufacturing.
c) the “zone of transition” in most urban areas.
d) the differences between Latin American and North American urban structure.
e) the problems that poor and minority urban residents face in finding and getting to suburban manufacturing and low-wage service jobs.

37.   Where is the transport-cost-minimizing location for a production process that uses a single, gross input?
a) anywhere between the market and the source of the input
b) at the market
c) at the source of the input
d) at the spatial margin of profitability
e) indeterminate, but likely near one or more of the input sources

38.  Where is the transport-cost-minimizing location for a production process that uses two pure inputs?
a) anywhere between the market and the source of the input
b) at the market
c) at the source of the input
d) at the spatial margin of profitability
e) indeterminate, but likely near one or more of the input sources

39.  Where is the transport-cost-minimizing location for a production process that uses more than one  gross input?
a) anywhere between the market and the source of the input
b) at the market
c) at the source of the input
d) at the spatial margin of profitability
e) indeterminate, but likely near one or more of the input sources

40.   Where is the transport-cost-minimizing location for a production process that uses a single, pure input?
a) anywhere between the market and the source of the input
b) at the market
c) at the source of the input
d) at the spatial margin of profitability
e) indeterminate, but likely near one or more of the input sources

41.   Where is the transport-cost-minimizing location for a production process that uses two pure and two ubiquitous inputs?
a) anywhere between the market and the source of the input
b) at the market
c) at the source of the input
d) at the spatial margin of profitability
e) indeterminate, but likely near one or more of the input sources

42.   How does our cost-minimizing industrial location model account for geographic differences in prevailing labor wages?
a) Determine whether the production process saves more money from locating in a low-wage area than it loses from being away from the point of minimum total transport costs.
b) If the material index is greater than one, production should be where labor wages are low.
c) If the material index is less than one, production should be where labor wages are low.
d) Locate in low-wage areas, offering wages slightly higher than the prevailing rate, to attract the best employees.
e) Offer wages that will induce migration from low-wage to high-wage areas.

43.   What’s the net result of the overall decline in transportation costs, over the past 100 years?
a) Cost-minimizing production is pulled toward immobile savings.
b) Cost-minimizing production is pulled toward material sources.
c) Cost-minimizing production is pulled toward the market.
d) Governments have become less powerful.
e) Managerial preference has become the deciding factor in industrial location.
 

Questions 44-48 refer to the following numbers for the U.S. and Washington State, for the total income (rather than employment) of each economy.  (The numbers are the correct orders of magnitude, but I’ve changed some of the proportions to make a stronger illustration).
 

44. Washington’s economy grew by how much, in these five years?
a)  -$10 billion
b)  $0 billion
c)  $10 billion
d)  $16.6 billion
e)  $20 billion

45. What proportion of that growth could be “expected” based on the national growth rate?
a) All of the growth can be accounted for in this way.
b) Half of the growth can be accounted for in this way.
c) More than 100%, because the nation grew faster than the region.
d) Negative:  the nation’s economy declined while Washington’s grew.
e) Negative:  the nation’s economy grew while Washington’s declined.

46.   Does the “competitive shift” of Washington State’s economy appear to be negative or positive?
a) negative
b) positive

47.  Does the “industry shift” (also called the “industry-mix component”) of Washington State’s  economy appear to be negative or positive?
a) negative
b) positive

48.  If you assume that primary and manufacturing are basic sectors, and that services and government are non-basic sectors, what happened to the Washington State multiplier between 1989 and 1994?
a) It decreased.
b) It increased.

49.   What are Kondratiev cycles?
a) business cycles
b) industry life cycles
c) the sequence of selection, assembly, production, and distribution
d) successive waves of growth and decline since the beginning of the Industrial Revolution, with a periodicity of 50-60 years
e) technological paradigms based on low and declining costs of storing, processing, and communicating information

50.  How should the fact that freight rates (per ton-mile) are higher for finished products than for raw materials affect cost-minimizing industrial location decisions?
a) It should increase the impact of locational inertia.
b) It should increase the role of labor wages in location decisions.
c) It should pull more production toward market centers.
d) It should reduce the likelihood of production at points that are not input sources, nor transshipment points, nor market locations.
e) It should reduce the role of time in location decisions.