Exercise 4.1 Suppose that landowners have the power to restrict , the distance to the edge of the city, in order to increase the land rent they earn. Suppose that, with no restriction, the urban land rent function is given by r = 100 – x, where x is distance in blocks to the CBD. Suppose that agricultural land rent rA is equal to 20. (a) Compute in the absence of any restriction by landowners, and illustrate your result in a diagram. Now suppose that landowners can restrict to a value of 65 blocks. When they impose this restriction, the urban land-rent curve shifts up, with the new rent function given by r = 105 – x. (b) Show the new land-rent curve in your diagram, and indicate the area corresponding to the land-rent loss resulting from the restriction, as well as the additional area showing the land-rent gain. (c) Compute the sizes of these areas, and compute the net gain or loss in land rent from imposing the restriction. Is the restriction beneficial to the landlords? Will it be imposed? (Hint: The area corresponding to the land rent gain is a parallelogram, but instead of using the area formula for that type of shape, the area can be computed more easily by multiplying the horizontal length of the parallelogram (65 blocks) by its height.) Now suppose that the landowners can impose a further restriction, with set equal to 50 blocks. When this restriction is imposed, the urban land-rent curve shifts up more, with the new rent function given by r = 110 – x. (d) Repeat (b) and (c). Relative to the original x restriction of 65, is this further restriction beneficial to the landlords? Will it be imposed? (e) If your answer is different from before, explain intuitively why a difference emerges.Brueckner, Jan K.. Lectures on Urban Economics (The MIT Press) (p. 255). The MIT Press. Kindle Edition.

CASE STUDY 2: Case Analysis of Risk, Uncertainty and Managing Incentives Select a company of your choice, any company but Southwest Airlines, and write a six to eight (6-8) page paper in which you: Evaluate a company's recent (within the last year) actions dealing with risk and uncertainty.  Offer advice for improving risk management.  For the company, you selected examine an adverse selection problem  and recommend how it should minimize its negative impact on  transactions.  For the company, you selected to determine the ways in which it is  dealing with the moral hazard problem and suggest best practices used  in the industry to deal with it.  For the company, you selected to identify a principal-agent  problem and evaluate the tools it uses to align incentives and improve  profitability.  For the company, you selected to examine the organizational  structure and suggests ways it can be changed to improve the overall  profitability.  Use at least five (5) quality academic resources in this assignment.  Note: One of your references regarding your research should have been published within the last 6 months. Note: Wikipedia and Investopedia do not qualify as an academic resource. Name: 3X-Week 9, Case Study 2: Cases Analysis of Risk, Uncertainty and Managing Incentives        Picking a Firm for Your Final Assignment Now the first step to doing well on the case study is your choice  of a firm that is/has faced a challenge in the last six months.  You  want to pick a firm in which you are really interested or a firm facing a  challenge in which you are particularly interested.  Make this  something you want to understand.  So, I know it can be hard to think  about picking.  Here are some things to consider. First, one category to think about could be a challenge arising  from dealing with regulators.  Examples, the T-Mobile-Sprint merger has  been cleared by DOJ.  After protectedly long struggle to get past the  charges of potential monopoly are they ready for the merger?  Another  example of facing up to regulatory challenges are Juul/Altria who must  deliver to the FDA by May 12th evidence that their product is safe.   More over it must provide evidence public benefits in helping people  reduce dependency on cigarettes.  But the biggest challenge may be can  they also demonstrate that they can deter use by those underage. A second category are companies facing the challenge of a new CEO. Succession transitions can be very messy.    Heineken's new CEO has a hard act to follow.  Outgoing  CEO Francoius von Boxmeer generated high rates of annual sales, 5.6% per  WSJ "CEO Succession at Heineken's: CEO Need Strong Head for Mixing  Drinks", and grew the company portfolio 170 brand to 300 by expanding  Heineken's past it strong market base in Europe.   But growth in world  sale of beer is declining, so it may be a hard act to follow.  Other  new CEOs include Alphabet gets new CEO who will refocus on Ads and  United Airlines new CEO will have to take on both new labor talks and  the fact that United has a large fleet of 737 MAXs Then  there is a new CEO at Boeing, but with continue fall out over short  cuts taken in gaining initial approval for the MAX 737 the question  remains, can Boeing turn the corner on re-gaining approvals for the MAX  and then can they re-gain the confidence of buyers?  There are multiple  pressures on Boeing, with MXA production still suspended and orders for  future production gone, can they recover?  What is the impact on the  Boeing supply chain as suppliers find they can't manager prolonged  suspension in production? Finally, in the latest twist the Boeing Board  adds two new members.  Is this a move to help support to new CEO or is  the board searching for a radical change in management? Now  we come to GE.  GE has shed thousands of jobs as it seeks to get out of  some businesses in order to focus on it strongest places in the market.  One of those strengths has been airplane technologies.  It has been a  supplier to Boeing, but GE also his ties to Airbus.  Will the fall off  in it business with Boeing be offset by the rising sales and production  of Airbus? There  are two other great stories both of which are connected to discussions  we will be having.  In week 9 we will look at the question of what went  wrong at Wells Fargo and the massive fraud of creating accounts for  customers who never agreed to owning those accounts.  Wells Fargo is now  on it third new CEO since the incident.  They have just announced a $3  billion settlement with the Justice Department and the SEC, but the long  battle back is not over.  Among other things the cost of settlements  has drain resources that would otherwise have gone to new investments.   AND the settlement with the Justice Department is about the past.  Wells  Fargo still has not obtained a clean bill of health from the Federal  Reserve (FED) over continuing questions about poor corporate governance  and it is barred from some growth opportunities until it demonstrates to  the FED that is has establish adequate governance.  It is still a long  road if this iconic business is to be saved. The  second story is connected to the discussion in week 10 about HP.   HP  once the mightiest of high tech companies hope to fend off a hostile  takeover by Xerox.  For now HP is proposing to buy back massive amounts  of stock to boost stock prices and raise the ROI for stockholders.  Can  they do it?  There are lots of doubters. Make this project something personal. Test you growing skills by taking a deep dive into current issue or challenge. See you in the discussion. Dr. Isley