ECON 111 Study Guide - Midterm Guide: Volatile Organic Compound, Tropospheric Ozone, Ice Core
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ECON 111 Full Course Notes
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This exam accounts for either 0% or 50% of your final grade depending on whether your first midterm score is higher or lower respectively than your score on this exam. This means that city house prices rise, and this reduces the incentive for additional people to move from the countryside. At the same time, the per capita productivity of the rural land base rises as people leave for the city, and this boosts the incomes of people living in the countryside. These two mechanisms together mean the city and rural populations are self-stabilizing: network effects mean that when one firm in the city shuts down in response to trade liberalization, it reduces the productivity of all remaining firms. This means that city wages fall and the city becomes less attractive to workers. Many workers then leave the city and this means that the provision of public amenities and infrastructure declines because the per capita cost of provision rises.
