Question: (2) This is Ch. 8 #4 in your textbook: Consider a city of 200 people (100 tall and 100 short) and two neighborhoods (100 people

(2) This is Ch. 8 #4 in your textbook: Consider a city of 200 people (100 tall and 100 short) and two neighborhoods (100 people in each). People generally prefer to live with short people. To draw the rent-premium curves, put the number of short people in neighborhood A (from 50 to 100) on the horizontal axis. The premium curve of tall people is concave from below (i.e., gets flatter as you move to the right), and in a neighborhood of 100 short people, the premium is $30. The premium curve for short people is linear, and in a neighborhood of 100 short people, the premium is $50. The two premium curves intersect at S=70 and premium = $20. a. Draw the tow premium curves b. Is integration (i.e., 50 short, 50 tall) a stable equilibrium? c. Is a mixed neighborhood a stable equilibrium? d. Is segregation a stable neighborhood? Explain

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