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High-income households

The following graph shows the high-income households’ and low-income households’ willingness to pay for the premium gap to live in the neighborhood, at a given the income composition. Suppose at the moment there are 75 high-income households in the neighborhood. Which of the following statement is true.(a) Because there are more high-income households than low-income households, high income households outbid low-income households. (b) This is a stable equilibrium. (c) Low-income households will outbid high-income households, in the equilibrium there will be fewer than 75 high-income households. (d) The stable equilibrium is a perfectly integrated neighborhood with equal numbers of high-income households and low-income households.

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