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A company mines 360,000 tons of coal per year in a rural county. The coal is worth ​$65 per ton. The average price for a​ 2,000-square-foot house with three bedrooms more than 20 km away from the mining site in this county is ​$220,000. The average price for a​ similar, 2,000-square-foot house with three bedrooms within 4 km of the mine is 8 percent lower. Using comparative​ statics, what is the effect of mining on home prices in this​ county?

Respuesta :

jepessoa

Answer:

-$17,600

Explanation:

Comparative statistics measure two different economic outputs based on how an exogenous (external) factor affects them. In this case it measures the price of a house far away from the mine and a house close to the mine.

The house far away costs $220,000, while the nearby house costs $202,400 (8% less). So the effect of the mine on the house prices is -$17,600

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