Suppose the government establishes a new city with 1 million workers, leaving 11 million workers in the old city. Assume that the number of cities remains at two. a. Immediately following the establishment of the new city, the utility in the small new city is _____ and the utility in the large old city is _____ b. On the utility curve, mark the position of the new city with “N” and the position of the old city (immediately following the formation of the new city) with “D.” Use arrows to indicate the direction of movement for each city. c. In the long-run equilibrium, the workforce of the new city _____ with utility _____; the workforce of the old city _____ with utility _____
4. Formation of New Cities Consider a region with a workforce of 12 million in a single city. The urban utility curve reaches its maximum with 3 million workers and includes the following combinations (W workers; U utility in $):
Suppose the government establishes a new city with 1 million workers, leaving 11 million workers in the old city. Assume that the number of cities remains at two.
a. Immediately following the establishment of the new city, the utility in the small new city is _____ and the utility in the large old city is _____
b. On the utility curve, mark the position of the new city with “N” and the position of the old city (immediately following the formation of the new city) with “D.” Use arrows to indicate the direction of movement for each city.
c. In the long-run equilibrium, the workforce of the new city _____ with utility _____; the workforce of the old city _____ with utility _____
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