7. Consider a nation with a fixed population of 12 million that is initially divided equally between two cities, Circusville and Dullsville. The urban utility curve is u(w) = 15 + 12w ? w2. Suppose a dictator in Circusville initiates free circuses, financed by coercive transfer payments from people outside the region. The circus program initially increases the utility of living in Circusville by 3 utils. Illustrate the effects of the circuses on the regional economy, including values for (i) city sizes and (ii) regional utility.

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