Let's assume we have 100 people who can live in either Alpha or Omega.

Two equations that represent what we talked about in Part One

The per person return when there are between 0 and 40 people living in a city is equal to 20 times x, where x is the number of people living in the city.

But when there are more than 40 people living in a city then the return per person is equal to 1,200 - .5(20 times x) where x is the number of people living in the city.

Questions (from the perspective of the person who is not clear about the graph and the equations).

1. If there are 10 people living in Alpha then the equation tells me that the return is 200 and if one more person moves to Alpha then the return goes to 220. Am I correct in believing that the return shows the total return of all the people living in the city? In other words, when 10 people live in Alpha each has a return of 20 for a total return of 200 and then when 11 people live in Alpha the total return is 220 and each person receives a return of 20?
2. Okay, I understand now what the number represents. What would be a story that would illustrate why the return per person goes up when more people move into a city?
3. Which line segments represent Alpha and which represent Omega?
4. Okay so if I am on point L for Alpha and point R for Omega then 40 people are living in Alpha and 40 are living on Omega. Is that correct?
5. Okay, so if 40 people are living in Alpha and more people move in, the return to people living in Alpha goes down. Tell me a story that explains why this makes sense.
6. If 40 people are living in Alpha that is the highest return they can earn. Why then would more people move to Alpha? (Answering this question requires you to do some calculations.)
7. You claim that if 100 people live in Alpha or 100 people live in Omega that this is an equilibrium. But the return per person is far below the return per person if 50 people live in Alpha and 50 people live in Omega. So if we started with 100 people living in Omega why wouldn't 50 people leave Omega and move to Alpha?