PA 5042: Urban and Regional Economics (2 credits)



PA 5042: Urban and Regional Economics (2 credits) PREREQUISITE: microeconomics or an understanding of the key concepts shown on the last pageCarlson 2-215 at 1:00-2:15 pm, Tuesday and Thursday, during the first half of the spring semester InstructorJason Cao, 295G Humphrey School, cao@umn.edu, 612-625-5671. Office hour: 5:00 – 6:00 pm Wednesday and by appointment Besides my office hour, the best way to reach me is by email. Start with PA5042 and several-word summary of your questions in the subject. I may copy individual questions to all students in the class if they are common questions.Teaching Assistant Sunghun Lim, slim0003@umn.eduLab sections: 10:10 – 11:00 and 11:15 – 12: 05 Friday at HHH 60Office hours: 5:00 – 6:00 pm Tuesday (cube 6 in HHH 295)ObjectivesThis course uses the principles of microeconomics to analyze urban/regional economic issues and problems. By the end of the course, students should be able to: Provide an economics-based explanation for why cities exist and what causes them to grow and shrink;Evaluate the importance of major economic forces in the development of cities; Conduct economic analysis of an urban area and its land markets;Use economic tools to analyze planning issues in different areas (land use, transportation, housing and environment) and to illustrate and address their impacts on the economy, social equity and environmental quality.ReadingsArthur O’Sullivan, Urban Economics, 8th edition, New York: McGraw-Hill/Irwin, 2011. (also on reserve in Wilson Library)Additional readings are available on the Moodle site.Course Requirements and GradingThe lectures will cover only the key concepts presented in the readings. Completing the readings before lectures is essential to maximize your learning. Attendance at lab sessions is mandatory. Your attendance and participation in lab activities will affect your participation score. Feel free to discuss homework problems with your peers. However, you are expected to finish your assignments individually. This class is demanding. It covers a lot of material at a pace that students describe as “relentless” or (more positively) “high energy.” It requires considerable outside-of-class time. UM policy states that for each credit hour of a class, undergraduates are expected to work three hours – counting class time and study time – to achieve an average grade. If we apply that policy to this graduate-level class, that means a work load of 12 hours per week for this class, implying at least 8 hours per week outside of class. Count on it.(see )Grades will be based on the following:Homework assignments6 x 10%Final exam30%Participation 10%The homework is a deliberately sizable portion of your grade, as (1) it is in your best interests to do it and keep up, and (2) it helps take some of the stress off the exam, and can help bring up your final grade if you have difficulty with the time pressure of exams. All homework assignments, in hard copies, are due in class on the following Thursdays. The penalty for each day of delay (1 minute to 24 hours) is worth 20% of the assignment grade. If you wish to dispute the grade of an assignment, you must do so IN WRITING within one week after the assignment has been returned. You must include a specific rationale for why your assignment deserves a higher grade. If you have any concern regarding the scheduling of the exam, come to me before the exam. No excuse will be accepted after the exam. A doctor’s note is required for make-up of the exam. Course PoliciesAcademic Dishonesty: Students are expected to do their own assigned work. If it is determined that a student has engaged in any form of Academic Dishonesty, he or she may be given an "F" or an "N" for the course, and may face additional sanctions from the University. Academic dishonesty in any portion of the academic work for a course shall be grounds for awarding a grade of F or N for the entire course. See and Collegiality: This course draws students from a variety of disciplines. This diversity of academic experience, assumptions regarding learning, and ways of approaching problems is one of the most enriching aspects of the course. In addition, every class is influenced by the fact that students come from widely diverse ethnic and cultural backgrounds and hold different values. Because a key to optimal learning and successful teaching is to hear, analyze, and draw from a diversity of views, the instructors expect collegial and respectful dialogue across disciplinary, cultural, and personal boundaries. Student Conduct: Instructors are responsible for maintaining order and a positive learning environment in the classroom. Students whose behavior is disruptive either to the instructor or to other students will be asked to leave. Students whose behavior suggests the need for counseling or other assistance may be referred to their college office or University Counseling and Consulting Services. Students whose behavior may violate the University Student Conduct Code may be referred to the Office of Student Judicial Affairs.Sexual Harassment: University policy prohibits sexual harassment as defined in the University Policy Statement () adopted on December 11, 1998. Complaints about sexual harassment should be reported to the University Office of Equal Opportunity, 419 Morrill.Accommodations for Students with Disabilities: Participants with special needs should talk to the instructors by the end of the second week to gain maximum access to course information. All discussions will remain confidential. University policy is to provide, on a flexible and individualized basis, reasonable accommodations to students who have documented disability conditions (e.g., physical, learning, psychiatric, vision, hearing, or systemic) that may affect their ability to participate in course activities or to meet course requirements. Students with disabilities are encouraged to contact Disability Services and their instructors to discuss their individual needs for accommodations. Disability Services is located in Suite180 McNamara Alumni Center, 200 Oak Street. Staff can be reached at or by calling 612/626-1333 (voice or TTY). Student Mental Health: As a student you may experience a range of issues that can cause barriers to learning, such as strained relationships, increased anxiety, alcohol/drug problems, feeling down, difficulty concentrating and/or lack of motivation. These mental health concerns or stressful events may lead to diminished academic performance or reduce a student's ability to participate in daily activities. University of Minnesota services are available to assist you with addressing these and other concerns you may be experiencing. You can learn more about the broad range of confidential mental health services available on campus via Week 1:Introduction Tuesday (1/19):Appendix: Tools of microeconomics (pp. 455-477)Thursday (1/21):Ch1: Introduction and axioms of urban economicsWeek 2:City DevelopmentTuesday (1/26): Ch2: Why do cities exist?Thursday (1/28):Ch3: Why do firms cluster?Ch4: City size, pp. 70-75Week 3: City Development and Land RentTuesday (2/2): Ch5: Urban growthThursday (2/4): Ch6: Urban land rentWeek 4: Land UseTuesday (2/9):Ch8: Neighborhood choiceThursday (2/11): Ch9: Zoning and growth controlsWeek 5: TransportationTuesday (2/16):Ch10: Autos and highwaysThursday (2/18):Ch11: Urban transitWeek 6: HousingTuesday (2/23):Ch14: Why is housing different? Thursday (2/25):Ch15: Housing policyWeek 7: Local GovernmentTuesday (3/1):Ch17: Local government revenueThursday (3/3): Final examThe following concepts are necessary for the success of this course:Refer to pp. 455-477 of the textbookEquilibrium and efficiency in a product marketSupply and demand curvesMarket equilibrium: it is reached when the demand and supply curves intersect. Factors that shift demand and supply curveElasticityMarket surplus = consumer surplus + producer surplusMarginal benefit (revenue): the demand curve is a marginal benefit curveMarginal cost: the supply curve is a marginal cost curveMarginal principle: pick the level at which marginal benefit equals marginal costExternalities: marginal social cost vs. marginal private costLabor market, analogues to product marketThe labor market uses concepts similar to the product market. However, the former emphasizes on the number of workers and wage. Supply and demand curvesMarket equilibrium: it is reached when the demand and supply curves intersect. Factors that shift demand and supply curveMarket surplusThe consumer choice modelUtility The budget line: all the combinations of two goods that exhaust a consumer’s budgetIndifference curve: different combinations of the two goods that make the consumer reach the same utilityMarginal rate of substitution: the slope of an indifference curveAn indifference map: a set of indifference curvesUtility maximization: when the indifference curve is tangent to the budget lineThe input choice model, analogues to the consumer choice modelIt shows how forms pick the best combination of inputs.Isoquant: different combinations of inputs that produce the target output (analogous to indifference curve)Marginal rate of technical substitution: the slope of the isoquantIsocost line: the combinations of two inputs that exhausted a given budgetCost minimization: when the isocost is tangent to the isoquant. Online course on Microeconomics on Kahn Academy and demand: surplus and externalities: : principles consumer choice model: market: ResourcesEconomic Lowdown Podcast Series, a decent “refresher” on some core economic concepts: ................
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