The rent in the two neighbor towns Cleansville and Grimyville is $10,000 and $8,000 respectively.The price difference is only explained by the high air pollution in Grimyville due to the presence of steel factories.Later,the Clean Air Act is instituted in Grimyville which forces the steel factories to stop polluting the air.The following are possible long term outcomes.(Ignore the effect of inflation)
i- Rent will go down in Cleansville
Ii- Rent will increase in Grimmyville
Iii- Rent will remain the same in Cleansville
Iv- Rent will remain the same in Grimmyville
V- Rent will be equal in both towns.

Question

The rent in the two neighbor towns Cleansville and Grimyville is $10,000 and $8,000 respectively.The price difference is only explained by the high air pollution in Grimyville due to the presence of steel factories.Later,the Clean Air Act is instituted in Grimyville which forces the steel factories to stop polluting the air.The following are possible long term outcomes.(Ignore the effect of inflation) 
i- Rent will go down in Cleansville
Ii- Rent will increase in Grimmyville
Iii- Rent will remain the same in Cleansville
Iv- Rent will remain the same in Grimmyville
V- Rent will be equal in both towns.

Quizplus · Accepted Answer

The Clean Air Act will reduce air pollution in Grimyville, making it more desirable to live in. This will increase demand for housing in Grimyville, leading to an increase in rent. In Cleansville, the reduction in air pollution in Grimyville will make it a less desirable place to live, leading to a decrease in demand for housing and a decrease in rent. In the long run, rent will be equal in both towns as people move from Cleansville to Grimyville in search of cleaner air.

The Rent in the Two Neighbor Towns Cleansville and Grimyville