(a) What is the utility from each choice if r1 = 20 and 1'2 = 15. Is this an equilibrium? How do you know? (b) For the rest of the problem you can now assume that rents are increasing in the population of each city. Specifically, assume r1(L1) = 4 * L1 and T2 (L2) = 8 * L2. Compute the equilibrium population of each city equilibrium rents.

(a) What is the utility from each choice if r1 = 20 and 1'2 = 15. Is this an equilibrium? How do you know? (b) For the rest of the problem you can now assume that rents are increasing in the population of each city. Specifically, assume r1(L1) = 4 * L1 and T2 (L2) = 8 * L2. Compute the equilibrium population of each city equilibrium rents.

Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter2: Some Tools Of The Economist

Section: Chapter Questions

Problem 14CQ

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