Why do cities exist? Why don’t we all just live on large lots of land in Texas /rural Ontario
Question 2: Use urban Economic and base economies to answer these short questions. (a) Why do cities exist? Why don’t we all just live on large lots of land in Texas /rural Ontario, etc.? We could be self -sufficient and avoid all the hassles of city life. (b) Why is Bay street a thing? Wouldn’t each of the financial firms be better off being in a smaller city away from each other? Would have less competition, offer their employees less money due to lower cost of living and have lower rent(c) Why is Las Vegas so much cheaper than Toronto? It is lower rent square foot of living space, shorter buildings, large home sizes, lower density, Why? (d) If economies are such big fans of congestion pricing, why don’t we see it more often in the real world? (e) How could we implement congestion pricing so that it would make all road users better off?
Urban and Base economics
Urban economics is the economics of cities and focusses on local effects of macro-economic forces, the necessity of integrated land use, urban infrastructure, housing policies, and urban challenges such as congestion. On the other hand, base economics refers to investors or firms who generate jobs locally or regionally. Both are parallel to each other since urban economics define the kind of job creation opportunities that enterprisers can explore specifically in urban areas.
Answer to the question:
(A)The creation or existence of cities is a phenomenon that follows the Principle of Least Effort, according to economic base theory. The principle states that the possible generation of business which leads to income occurs where there exists an immense population. Thus, cities exist due to a majority population seeking favorable places to trade. Though cumbersome, a huge population prefers city life primarily due to the trade exchanges which guarantee economies of scale for entrepreneurs and trade firms. For instance, if everyone lived on their backyard land, all would-be producers meaning no business, which translates to no income hence zero profits and a compounded problem of economic poverty.
- B) Unlike Bay street in Ontario, Canada, which is considered the center of Canadian financial operations and Toronto’s financial district, most countries have their financial firms far split among its’ cities. This is because most financial hubs opt to invest their operations in various locations due to the surety of current and future long-term financial securities. The securities aid at managing operations on the occurrence of emergencies as well as securing financial goals for the future. Additionally, firms invest in most places to attract a larger market share.
(C) Las Vegas is an American city in Nevada and the leading financial, commercial, and cultural city of Nevada state, similar to Toronto, Ontario’s capital in Canada. Both being huge, populous cities, Las Vegas is, however, estimated to be 8% cheaper to Toronto, for instance in terms of consumer prices such as rent owing to its low population density compared to Toronto.
(D) Congestion pricing refers to a means of charging an extra fee on services subject to inelastic demand increase such as transport service. Though economists advocate the use of congestion pricing as a way of increasing the tax basket, harsh impact on businesses such as the threatening collapse of small service business in the cities and inequality is what has probably hampered implementation of the pricing. (E) The pricing method, according to transport economics, is essential if implemented through the use of a free price mechanism. Free price mechanisms are intended to sensitize road users concerning the costs that are charged on drivers and motorists during peak hours. This is to ensure that passengers pay the additional fee for the negative externalities they create to the environment. Question 3: Read the paper by Levitt and Syverson (2007). “Market Distortions when agents are better informed: The value of information in Real Estate Transactions.” Imagine you are relocating three months from now and wish to sell your home. You consider either hiring a real estate agent or putting the property for sale yourself. 1) Explain how you are going to make this decision. If you have a real estate agent, will the agent be willing to work in your interest in finding the best customer possible? 2) Design two ways in which you can motivate the real estate agent to act in your best interest. Will your incentive scheme work? Make use of references to support your claim. Real Estate Transactions Real estate refers to any utilized land together with the surrounding natural resources and occurs under four categories, namely residential, commercial, and industrial. Transactions in real estate refer to the process of negotiating, agreeing, and executing real estate transfer. The entire process involves an intermediary at the initial stage, listing agreements, and ownership transfer in the final stage.
Answer to the question: 1) Based on the information from Levitt and Syverson (2007), fully entrusting real estate agents for property sale is highly risky given the vast knowledge of the agents, which enables them to exploit the informational advantage. The reason is majorly due to the professionalism of the job that is hidden from the general public. Therefore, as a house seller, I would regard sourcing the knowledge on property valuation, sale, and house market from scholarly articles concerning property sale before bidding my house. This is because scholarly information is unbiased and can be relied upon when making critical decisions such as asset sales. If, for instance, I have a real estate agent, the possibility of the agent seeking a customer of my choice is rare since agents receive a share of incremental profit for a higher value, which equates to the higher market price of the asset contrary to the owner’s selling price. 2) To persuade the real estate agent to act on my interest, I can use a win-win perspective by offering a 25% commission to the agent on the asset price above the negotiated price. A similar strategy will apply if the agent fails to meet the targeted price. An alternative persuasion can be offering the sales agent a series of listings on the event of complying with the bid’s price. The incentive schemes above are the result- oriented hence, effective to ensure that the realtor acts in congruency with the seller, according to Henry& Abdullah (2001). Question 4: based on t Looking at Yahoo’s current 10-k report and proxy statement, answer the following questions. (A) According to the compensation committee, is the current compensation of the top executive(s) justified based on the company’s and/or current performance. (B) Review the management’s discussions and analysis of the financial condition and results of the operations (the MD&A) in the company’s annual report. Based on the information in the MD&A, is the compensation of the top executives justified? Is it consistent with the compensation committees’ analysis? (C) Based on the information in the proxy statement and the annual report, would any of the other executive officers be an appropriate replacement for the CEO? If not, whom would you recommend as an outside candidate (Hint: Review the profiles of top management in competitors’ annual report Yahoo Yahoo is an American based company headquartered in Sunnyvale, California whose cardinal operations are web service provision. Currently, the company is owned by Verizon Communications and accruing revenue of approximately 5.17 billion U.S dollars. It is among the few web providers such as Google, Tubidy, My way, and Opera. Answer to the question: A) Based on the annual financial reports under the current form,10-k, issued by the principal executive office at the close of the 2016 financial year, the records dictated as follows. The aggregate market value of closing stock shares held by registered non- affiliates inclusion of the executives totaled $ 32.7 billion compared to the amount in the first quarter of 2017, which amounted to $36.4 billion. In line with the compensation committee, making up for the top executive’s financial breach is unjustifiable owing to the comparative profit margins of 2016/2017. B) The company’s gross revenue shot up from $1087 million in 2016 to $ 3287 million in the following year according to financial analysis of the management. The robust increase in proceeds returns was proportional to the proxy statement of the annual report in 10-k, which further affirms the unjustifiability of the executives’ compensation. Both reports analyzing yahoo’s financial records are consistent, which is proven in the growth of the increment of profit and closing stock share. C) Based on the results from the analysis, an external party would not be best suited for Marrisa Mayer’s CEO’s seat. Instead, I would recommend Indriasari, the current secretary for Yahoo company, in the CEO’s position. This is so to ensure the consistency of the company’s upscale operations. Question 5: Use the CAGE (Cultural, Administrative, Geographical, and Economic) Framework to Analyze The Cross Border Integration of Spain and Germany. Cross Border Integration Cross border integration is a complex process that defines Integration from the perspective of the border porosity to flows. The process involves a mutual understanding and a willingness to cooperate between the nations concerned. Among the significant roles, it plays include, culture enrichening and strengthening economic bonds of border states.
Answer to the question:
Exploring cross border integration of the European Union, the Integration is highly considered to increase European harmony; thus, it largely affected European state’s example, Spain and Germany. In the cultural context, Spaniards have continuously migrated to Germany in the adventure of job opportunities. Around the European Union, Germany is sought to be the best place for settlement, especially by Spain owing to the sophisticated life and countless opportunities for virtually all level careers. This has forced the Spaniards to adopt German culture, the language to fit in the society. On the economic front, the Spanish government has welcomed the signing of a treaty on Integration and cooperation with Germany and France. The treaty was intended to reinforce the economic and monetary union together with the promotion of tax convergence of the states. The treaty has encouraged cross border integrations that deepen and intensifies states’ unity. Administrative policies also have served a great role in strengthening border cohesion, especially the administrative policies by Spain, which focuses on enlarging legal migrations hence committed to Integration. The policies were a result of the Spanish economic crisis, which forced the government to adopt measures that would revive the economy. Furthermore, the policy’s specific target is Germany taking into consideration the country’s best trading partner. On the geographic dimension, Germany is bound to Spain by Belgium, and Luxembourg where both are members of the European Union and Eurozone. The situation eased cross border interactions of Spain and Germany facilitated by the linking infrastructure
References
Levitt &Syversson(2007). “Market Discussions when Agents are Better Informed: The Value of
Information in Real Estate”.
Munneke J& Yavas A(2001). The Journal of Real Estate Finance and Economics.22,5-21(2001).