Urban economy is defined as the equilibrium number ofworkers. Public policy affects urban economic growth...

Urban economy is defined as the equilibrium number of workers. Public policy affects urban economic growth by shifting the city's demand and supply curves.

a) Do subsidy programs (tax abatement, industrial bonds, government bonds, and subsidized site development) shift the demand curve or supply curves or both? Explain your answer using a graph.

b) Under what circumstance does a pollution-abatement program decreases the city's total employment? Also explain using a graph.

Expert Solution

a). Answer:

As per the question urban economy is defined as the equilibrium number of workers. Public policy affects urban economic growth by shifting the city's demand and supply curves. The subsidy programs (tax abatement, industrial bonds, government bonds, and subsidized site development) will increase the production level and and increasing production level will increase the production (supply) that will increase demand for the workforces and demand curve shift the supply curve right. In this graph you can see the economy is equilibrium at point "E0" and increasing production level increase demand for the workforces and demand curve shift the supply curve right from D to D1. Where production level increase its increase the demand for workforce and increase unemployment opportunities and decrease unemployment. Its also increase the wages level that increase supply of the workforce and supply curve shift right from S to S1.

Graph:

b). Answer:

Under what circumstance does a pollution-abatement program decreases the city's total employment? Also explain using a graph.

When during the pollution-abatement program (pollution abatement refers to technology applied or measure taken to reduce pollution and/or its impacts on the environment.) focus on deduction of greenhouse gases emission or Cut CO2 emission or decreasing CO2 emission but not taken in use the new technology or change technology (green technology) then the producers cut CO2 emission through production cut or decreasing production level. Because the producers have not change technology so it can not decrease CO2 emission without production cut. Decreasing production level decrease employment opportunities and increase unemployment level.

You can see how the production cut shift the demand curve left (from D to D1).

Graph:

Rahul Sunny answered 2 years ago

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