Question

a)True, false or uncertain? Justify your response to each of the following statements

Covid-19 has reduced the fraction of people who commute and, with more companies shifting their employees to work from home more often, this reduction can be expected to persist even if there is no change in the number of jobs in the city. Fewer commuters on the road reduces the cost of commuting for the people who do commute. Suppose that the shift in the cost of commuting is proportional to percentage reduction in the fraction: e.g. if there are 25 percent fewer commuters then the cost of commuting drops by 25 percent. The change in commuting would have no effect on the optimal size of a city, and it would decrease the equilibrium size of a big city and increase the size of some small cities

Answer 1

Statement 1:-Uncertain

because it cannot be predicted that if this number of reduction in commutors would presists or not even if numbers of jobs remain unchanged.

Statement 2:-false

Because an assumption is mentioned in the question that reduction in commutors is equal to the reduction in cost of commuting.So it affect big as well as small city in same way.It will no fall for one or rise for another.
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