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Consider a household with a single worker who commutes to the city center. The monthly commuting cost for each additional kilometer of commute is $20.

Consider a household with a single worker who commutes to the city center. The monthly commuting cost for each additional kilometer of commute is $20. Suppose housing consumption is the same across all residential locations, = 100 !. A polluting factory is located at = 6 . At = 0 , the housing price is $10 per !. Pollution from the factory has negative impact on the health of nearby residents, with the monthly health cost decreasing by $30 per km away from the factory. Draw the housing-price curve, and indicate the slope at = 2 and at = 7 , and the housing price at = 10 (5 points)

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