Question
using any or all of these : Five Basic Principles: margins, opportunity cost, equilibrium, gains from trade, comparativestatics plus Self-Reinforcing Effects The Work from Home
using any or all of these : Five Basic Principles: margins, opportunity cost, equilibrium, gains from trade, comparativestatics plus Self-Reinforcing Effects
The Work from Home (WFH) movement has reduced the fraction of people who commute even if there is no change in the number of jobs in the city. Fewer commuters on the road reduces the cost of commuting for the people who do commute. Suppose that the shift in the cost of commuting is proportional to percentage reduction in the number of commuters: e.g., if there are 25 percent fewer commuters then the cost of commuting drops by 25 percent. Discuss the effect of this change on the optimal size of a city and on the equilibrium size of a big city. If there is a change in the equilibrium size, would the size of the change vary with the industries which are active in the city?
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