Question

Question Eight

Assume that a high-speed train starts running between Duluth and Minneapolis. What will the introduction of the high speed train do to the value of homes in Duluth? Explain your reasoning. How is your answer connected to the concept of opportunity cost? Explain.

Answer 1

The value of houses in Duluth will increase, this is because an additional service is now available near these houses, making it more convenient for its residents to commute. At the same time, it should also be noted that the introduction of the train would mean more pollution in Duluth, and also more people would not want to shift to Duluth, making it more populated. Thus, the gain would be more convenience and more value of houses to the already existing residents, while these residents would have to give up clean air, and more open surroundings to a more polluted air and also more congested surroundings.