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Business, 09.12.2020 23:50 deniseelyons15

Consider a city of 200 people (100 rich and 100 poor) and two neighborhoods (100 people in each). Both groups generally prefer to live with rich people and are willing to pay a premium for living with a fraction of rich people that is larger than 50%. Poor people’s premium curve is given as �!""# = 2�$, where x is the percentage of rich above 50% (e. g., if there are 52% rich, x will be 2). Rich people’s premium curve is given by �%&'( = 60� − 0.4�$. a) What is the equilibrium outcome (i. e., what is the share of rich and poor people, respectively). Explain.

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Consider a city of 200 people (100 rich and 100 poor) and two neighborhoods (100 people in each). Bo...
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