equilibrium labor quantity? (5) qulibrium wage? What is the new (35 marks) Suppo
ID: 1145531 • Letter: E
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equilibrium labor quantity? (5) qulibrium wage? What is the new (35 marks) Suppose a typical household has a fixed amount of $800 to spend on housing and commuting on each month. The cost of commuting is $50 per month per mile: A household living one mile from the employment district incurs $50 per month in commuting cost, compare for a household two miles away, and so on. The price of housi foot of housing per month. The price of housing at 10 miles away from the center is 0.30. The demand for housing floor space is 1000 square feet at 10 miles away from center. Based on the information answer the following questions: i. Suppose there is no consumer substitution in consumption i.e. consumer lives in a 5) d to $100 ng is defined as the price per square foot house regardless of the price of housing, what is the slope of the housing price curve? (5) Given no consumer substitution what is the price of housing at 5 miles away from the center? Draw the housing price curve in tis case. (10) Suppose there exists a consumer substitution where at 5 miles away from the center consumer prefers to live in 500 square foot house. What is the price of house at 5 miles from the center? Draw the housing price diagram under this situation. (10) ii. iii. iv. Why is there a difference in housing price curve between the two different situation (i.e. consumer substitution and no consumer substitution). (10)Explanation / Answer
The total budget of the household is $800.
Cost of Commuting per Unit is $50 , the total amount of units that can be purchased if the budget was entirely spent 16 units / 16 miles
The price per sq feet 10 miles away is $ 0.3 , the price of the
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