Question 5 Suppose that there are two types of residents: Beer drinkers and Wine drinkers. The utility a resident receives from living in a neighborhood depends on the type of beverage they prefer to drink, as well as the composition of the neighborhood they live in. Neighborhood % Wine Drinkers Happiness of a drinker Wine Beer 0 O 0 10 ll 11 20 21 21 30 30 30 40 38 37 50 45 43 60 52 49 70 45 54 80 38 59 90 3D 62 100 20 59 Suppose there are two neighborhoods in Abaville: A and B, each with 100 houses. There are 100 Wine drinkers and 100 Beer drinkers who must choose one of the two neighborhoods to live in. Let Em denote the number of beer drinkers in neighborhood A. (a) Find RPA(50), which is the Neighborhood A rent premium when 33A 2 60. (b) Find RPAUO). (c) There is an equilibrium in residential patterns at 5A 2 65. Is this stable or unstable? Explain your answer using the previous two parts. Consider instead the city of Cosmopolitown, which is also inhabited by Beer drinkers and Wine drinkers. We assume that Neighborhood C is small relative to the size of the city, and that all other neighborhoods are 50 percent Beer drinkers and 50 percent Wine drinkers. This means that the alternative to living in Neighborhood C is always the same (living in a neighborhood with 50 percent Wine and 50 percent Beer drinkers). (d) Find RPC(60) and RPCUO), the Neighborhood C rent premium when, respectively, be : 60 and b0 2 70