In the Crescent City urbanized area, all households have the same tastes, but some households are richer and some are poorer.Richer households earn $100,000 per year and poor households earn $50,000 per year.Amenities and public services are the same everywhere in the urbanized area. There is one commuter per household and all commuters work downtown.A reliable research study of commuting behavior shows that richer households value their commuting time at $20 per hour and poorer households value their time at $10 per hour.What is the income elasticity of the value of commuting time?There are two housing bid-rent curves that cross at the distance x*.At x* rich households consume 4000 sq. feet of housing, and poor households consume 1000 sq. feet.

a.What is the income elasticity for the value of commuting time in Crescent City?

b.What is the income elasticity for the demand for housing in Crescent City?

c.Which income group, the poorer or richer, lives closer to the center of town?Explain.

d.What is the dissimilarity index between the richer and poorer households in Crescent City?Explain.

e.Which income group, poorer or richer, has a higher utility level?Explain.