Regional and Urban Economics and Economic Development

1. According to the traditional neoclassical model, what is the impact on production of:

a. 100 new machine presses

b. 200 workers entering the labor force

c. An increase in demand of $1.5 million new lawnmowers

d. Incorporating nanotechnology into production

e. An increase in taxes to benefit less fortunate regions

2. According to the neoclassical model, a new lawnmower manufacturing firm locates in Tall Grass Prairie, despite that area’s low unemployment rate. To be able to fulfill the $1.5 million contract for new lawnmowers, the firm is forced to increase wages by 30%. According to the neoclassical model, how does this increase in wages affect:

a. The other employers in Tall Grass Prairie

b. Employers in neighboring communities

c. Employees in both Tall Grass Prairie and neighboring communities