Consider a two-city (A and B) regional economy where each city operates on the negatively sloped portion of its utility curve. In the initial equilibrium, the two cities are identical. Then air pollution (lead emissions) in city B decreases the brainpower and productivity of workers in the city by 20 percent. Illustrate the effects of lead emissions on the regional equilibrium, indicating the direction of changes in city size (the number of workers) and regional utility.
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