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Assume the utility functions for two cities are identical and are given by U=N - 0.1*N2, where N denotes the city’s population in million. (a) What is each city’s utility maximizing population? (b) If each city had a population of 6.5 million people, how would these cities change their size? Assuming that the total population of 13 million cannot be changed, would there be a smaller and a larger city? Would there be three or more cities? Or would there be no change at all. Explain.

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M9440630

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