Purchase Solution

three types of houses

Not what you're looking for?

Ask Custom Question

In Metro, there are three types of houses: E (expensive), M (medium), and C (cheap). A recent survey suggest that there are three types of preferences for fire protection: H (high), I (intermediate), and L (low). Mr Wizard, an economic consultant to the city, recently made the following statement: "If my assumptions are correct , the shopping and sorting from the Tiebout process will generate three municipalities"

a). Assume that Mr. Wizard's reasoning is correct. What are his assumptions?
b). Suppose that the equilibrium number of municipalities turn out to be nine, not three. Where did Mr. Wizard go wrong? What set of assumptions would have given him the correction prediction?

Purchase this Solution

Solution Summary

This solution gives you a detailed discussion on three types of houses.

Solution Preview

an economic consultant to the city, recently made the following statement:
In Metro, there are three types of houses: E (expensive), M (medium), and C (cheap). A recent survey suggest that there are three types of preferences for fire protection: H (high), I (intermediate), and L (low). Mr Wizard, an economic consultant to the city, recently made the following statement: "If my assumptions are correct , the shopping and sorting from the Tiebout process will generate three municipalities" ...

Purchase this Solution


Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.