1. Suppose there are two cities, Eugene and Springfield and 100 identical workers who choose which city to live in. Suppose the indirect utility of living in either city is given by: V;=Wj+M; -R; Where W; is the wage of living in either city j, R; is rents and M; are amenities in city j. Wages in Eugene, We are given by: WE=230. Wages in Springfield, Ws are given by: Ws=200. Rents in either city are given by the number of workers: R;=L; for both cities, where L; is the number of workers living in either city j. Amenities in Eugene, Me are given by: ME=0 and amenities in Springfield are given by Ms=10 2. The government of Eugene is considering a scheme to attract workers to Eugene. They want to tax firms $30 per worker that is hired in Eugene. The wage received by the worker then changes to WE=230-30. The tax revenue in Eugene is used to fund local public schools. Suppose that amenities in Eugene can therefore be written as a function of tax revenue as: ME=(TE/60) From above, we can see that the government will raise $30 for each worker in Eugene. Everything else is the same as in Problem 1. a. After this scheme is in place, how many workers live in Eugene in equilibrium? 1. Suppose there are two cities, Eugene and Springfield and 100 identical workers who choose which city to live in. Suppose the indirect utility of living in either city is given by: V;=Wj+M; -R; Where W; is the wage of living in either city j, R; is rents and M; are amenities in city j. Wages in Eugene, We are given by: WE=230. Wages in Springfield, Ws are given by: Ws=200. Rents in either city are given by the number of workers: R;=L; for both cities, where L; is the number of workers living in either city j. Amenities in Eugene, Me are given by: ME=0 and amenities in Springfield are given by Ms=10 1. Suppose there are two cities, Eugene and Springfield and 100 identical workers who choose which city to live in. Suppose the indirect utility of living in either city is given by: V;=Wj+M; -R; Where W; is the wage of living in either city j, R; is rents and M; are amenities in city j. Wages in Eugene, We are given by: WE=230. Wages in Springfield, Ws are given by: Ws=200. Rents in either city are given by the number of workers: R;=L; for both cities, where L; is the number of workers living in either city j. Amenities in Eugene, Me are given by: ME=0 and amenities in Springfield are given by Ms=10 2. The government of Eugene is considering a scheme to attract workers to Eugene. They want to tax firms $30 per worker that is hired in Eugene. The wage received by the worker then changes to WE=230-30. The tax revenue in Eugene is used to fund local public schools. Suppose that amenities in Eugene can therefore be written as a function of tax revenue as: ME=(TE/60) From above, we can see that the government will raise $30 for each worker in Eugene. Everything else is the same as in Problem 1. a. After this scheme is in place, how many workers live in Eugene in equilibrium? 1. Suppose there are two cities, Eugene and Springfield and 100 identical workers who choose which city to live in. Suppose the indirect utility of living in either city is given by: V;=Wj+M; -R; Where W; is the wage of living in either city j, R; is rents and M; are amenities in city j. Wages in Eugene, We are given by: WE=230. Wages in Springfield, Ws are given by: Ws=200. Rents in either city are given by the number of workers: R;=L; for both cities, where L; is the number of workers living in either city j. Amenities in Eugene, Me are given by: ME=0 and amenities in Springfield are given by Ms=10
