A small share of the population of the surrounding country

Reference no: EM13882762

Consider a small, open, city that represents a small share of the population of the surrounding country. People can freely and costlessly move into and out of the city from the surrounding area. Within the city, all workers commute, by private automobile, to offices in a business district at the city's center. There is no consumer or factor substitution in the markets for office space or housing.

If a tax on gasoline was imposed, which had the effect of increasing worker commuting costs, describe what the effect would be on each of the following in 2 or 3 sentences.

a. the radius of the city

b. worker wages

c. the radius of the central business district

d. the utility of workers

Reference no: EM13882762

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