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 $):

W 1 2 3 4 5 6 7 8 9 10 11 12

U 32 56 70 65 60 55 50 45 40 35 30 25

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 ____