You are the economist for the Department of Economic Development of Ruston, Pennsylvania. You know that employment in export industries is 25,000 and that total employment in the urban area is 60,000. You receive word that Volkswagen has decided to locate a plant in your community and that they plan to hire 3,000 workers.

a. Can you use the information in the question to predict the effect of the increase in export employment on total employment in the urban area? How would you go about generating such a forecast?

b. Make a careful listing of the assumptions that you made in making your forecast so that you can make clear the potential weaknesses in that forecast.