A company mines 300,000 tons of coal per year in a rural county. The coal is worth $65 per ton. The average price for a 2,000-square-foot house with three bedrooms more than 20 km away from the mining site in this county is $220,000. The average price for a similar, 2,000-square-foot house with three bedrooms within 4 km of the mine is 8 percent lower. Using comparative statics, what is the effect of mining on home prices in this county? Mining changes the price of a 2,000-square-foot home (with three bedrooms) by $. (Round your response to two decimal places and use a negative sign if necessary.)
A company mines 300,000 tons of coal per year in a rural county. The coal is worth $65 per ton. The average price for a 2,000-square-foot house with three bedrooms more than 20 km away from the mining site in this county is $220,000. The average price for a similar, 2,000-square-foot house with three bedrooms within 4 km of the mine is 8 percent lower. Using comparative statics, what is the effect of mining on home prices in this county? Mining changes the price of a 2,000-square-foot home (with three bedrooms) by $. (Round your response to two decimal places and use a negative sign if necessary.)
Chapter12: The Partial Equilibrium Competitive Model
Section: Chapter Questions
Problem 12.3P
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