Question 1

The U.S. Constitution stipulates that when government uses its takings powers to acquire land for a project,

Accepted Answer

A)  the government must own and operate the completed project. 
B)  the government can resell the land to a private developer. 
C)  the government must turn over the land to state or city governments. 
D)  none of the above 
A)  the government must own and operate the completed project. 
B)  the government can resell the land to a private developer. 
C)  the government must turn over the land to state or city governments. 
D)  none of the above

Question 2

Explain why the transactions costs involved with trying to acquire 100 acres of land from one landowner are probably going to be less than the transactions costs involved with trying to acquire 10 acres of land from each of 10 different landowners.

Accepted Answer

Striking deals to purchase land can be t

Question 3

Government's use of eminent domain is a solution to

Accepted Answer

A)  the problem of negative externalities. 
B)  potential monopolization of a market. 
C)  the holdout problem. 
D)  the free-rider problem. 
A)  the problem of negative externalities. 
B)  potential monopolization of a market. 
C)  the holdout problem. 
D)  the free-rider problem.

Question 4

Landowners whose property is seized through eminent domain share in the gains that result from the taking of their property.

Accepted Answer

A) True 
 B)False

Question 5

Lolita wants to purchase a rather bland-looking shopping center built in the 1970s, tear it down, and construct an architecturally-stimulating office building that will confer $750,000 of benefits to society. In its current state, the shopping center is worth $900,000. Lolita goes to the city council with her proposal and tells the council members that the new office building will beautify the city and increase property-tax revenues. If the city council agrees to use eminent domain to allow Lolita to proceed with her project, society as a whole will

Accepted Answer

A)  be made richer since property-tax revenues will increase. 
B)  be made richer since the area will be more aesthetically beautiful. 
C)  be made poorer since the project confers benefits that are lower than the current value of the shopping center. 
D)  not be affected since the project only encompasses one small parcel of land. 
A)  be made richer since property-tax revenues will increase. 
B)  be made richer since the area will be more aesthetically beautiful. 
C)  be made poorer since the project confers benefits that are lower than the current value of the shopping center. 
D)  not be affected since the project only encompasses one small parcel of land.

Question 6

Economists refer to a holdout as someone who refuses to produce a pure public good with private funds.

Accepted Answer

A) True 
 B)False

Question 7

If the government seizes Lucy's property and resells it to Ethel,

Accepted Answer

A)  Lucy and Ethel collectively capture the resulting gains. 
B)  Lucy captures the resulting gains. 
C)  Ethel captures the resulting gains. 
D)  Neither Lucy nor Ethel capture any resulting gains. 
A)  Lucy and Ethel collectively capture the resulting gains. 
B)  Lucy captures the resulting gains. 
C)  Ethel captures the resulting gains. 
D)  Neither Lucy nor Ethel capture any resulting gains.

Question 8

When providing a good involves assembling several parcels of contiguous land, private individuals may encounter difficulty negotiating the purchase of those parcels.

Accepted Answer

A) True 
 B)False

Question 9

In the United States, the powers of eminent domain are put forth in the Fifth Amendment to the Constitution.

Accepted Answer

A) True 
 B)False

Question 10

Scenario 11.1: Mariana has decided that she would like to build a private electric railway that would directly connect her small town to her favorite casino 75 miles away. She discovers that to build her railway, she will need to purchase an equal amount of land from 5 ranchers: Abe, Ben, Cat, Don, and Eve. Mariana believes that the revenue she would receive from running the railroad would be enough to cover all of her construction costs and leave her $3 million to buy the land. Mariana calculates the land she needs to build the railway will cost her $2 million.
-Refer to Scenario 11.1. How much would Mariana expect to pay each landowner for his or her land?

Accepted Answer

A)  $200,000 
B)  $400,000 
C)  $600,000 
D)  $3 million 
A)  $200,000 
B)  $400,000 
C)  $600,000 
D)  $3 million

Question 11

Lolita wants to purchase a rather bland-looking shopping center built in the 1970s, tear it down, and construct an architecturally-stimulating office building that will confer $750,000 of benefits to society. In its current state, the shopping center is worth $900,000. Lolita goes to the city council with her proposal and tells the council members that the new office building will beautify the city and increase property-tax revenues. If the city council agrees to use eminent domain to allow Lolita to proceed with her project, the benevolent social planner will

Accepted Answer

A)  rejoice since the area will become more beautiful. 
B)  rejoice since the size of the economic pie will increase. 
C)  remain indifferent since the enhanced beauty will offset the change in the size of the economic pie. 
D)  be unhappy since the size of the economic pie will decrease. 
A)  rejoice since the area will become more beautiful. 
B)  rejoice since the size of the economic pie will increase. 
C)  remain indifferent since the enhanced beauty will offset the change in the size of the economic pie. 
D)  be unhappy since the size of the economic pie will decrease.

Question 12

In general, the more parties there are to a negotiation, the more difficult it becomes to successfully reach an agreement with all parties.

Accepted Answer

A) True 
 B)False

Question 13

Scenario 11.1: Mariana has decided that she would like to build a private electric railway that would directly connect her small town to her favorite casino 75 miles away. She discovers that to build her railway, she will need to purchase an equal amount of land from 5 ranchers: Abe, Ben, Cat, Don, and Eve. Mariana believes that the revenue she would receive from running the railroad would be enough to cover all of her construction costs and leave her $3 million to buy the land. Mariana calculates the land she needs to build the railway will cost her $2 million.
-Refer to Scenario 11.1. Suppose all five ranchers know that Mariana has $3 million to spend on their land and they also know that their land that Mariana needs is worth a total of $2 million. Each rancher believes that one or more of the other ranchers will settle for less than the maximum value of their land and therefore each decides to ask Mariana to pay $750,000 for their parcel of land. In this situation, the economic pie will

Accepted Answer

A)  grow by $3.75 million. 
B)  grow by $3 million. 
C)  not grow. 
D)  shrink by $1 million. 
A)  grow by $3.75 million. 
B)  grow by $3 million. 
C)  not grow. 
D)  shrink by $1 million.

Question 14

Scenario 11.1: Mariana has decided that she would like to build a private electric railway that would directly connect her small town to her favorite casino 75 miles away. She discovers that to build her railway, she will need to purchase an equal amount of land from 5 ranchers: Abe, Ben, Cat, Don, and Eve. Mariana believes that the revenue she would receive from running the railroad would be enough to cover all of her construction costs and leave her $3 million to buy the land. Mariana calculates the land she needs to build the railway will cost her $2 million.
-Refer to Scenario 11.1. Suppose all five ranchers know that their land that Mariana needs is worth a total of $2 million. If each rancher agrees to sell his or her parcel of land to Mariana for $500,000, the economic pie will

Accepted Answer

A)  grow by $500,000. 
B)  grow by $1 million. 
C)  grow by $2 million. 
D)  shrink by $500,000. 
A)  grow by $500,000. 
B)  grow by $1 million. 
C)  grow by $2 million. 
D)  shrink by $500,000.

Question 15

Some governments have adopted statutes that require, under certain circumstances, payment greater than fair market value be paid to property owners for property seized through eminent domain.

Accepted Answer

A) True 
 B)False

Question 16

Under the conditions set for the taking of property by eminent domain, the government could take private property

Accepted Answer

A)  to build a highway. 
B)  to allow a private developer to construct residential housing. 
C)  so a professional sports franchise can build a new stadium. 
D)  all of the above 
A)  to build a highway. 
B)  to allow a private developer to construct residential housing. 
C)  so a professional sports franchise can build a new stadium. 
D)  all of the above

Question 17

The use of eminent domain to seize private property always results in an increase in cooperative surplus.

Accepted Answer

A) True 
 B)False

Question 18

When the Dallas Cowboys decided on Arlington, Texas as the home for their new stadium in 2005, the City of Arlington used eminent domain to acquire property from individuals who were either unwilling to sell or demanded what the city deemed were unreasonable prices for their property. In this situation, eminent domain

Accepted Answer

A)  reduced transactions costs. 
B)  solved the holdout problem. 
C)  accelerated the process of getting the stadium built. 
D)  all of the above 
A)  reduced transactions costs. 
B)  solved the holdout problem. 
C)  accelerated the process of getting the stadium built. 
D)  all of the above

Question 19

A condition for the use of eminent domain is that the property being taken

Accepted Answer

A)  must remain the property of the government entity which authorized the use of eminent domain. 
B)  must be intended for public use. 
C)  must be undeveloped property. 
D)  must be considered blighted property. 
A)  must remain the property of the government entity which authorized the use of eminent domain. 
B)  must be intended for public use. 
C)  must be undeveloped property. 
D)  must be considered blighted property.

Question 20

Eminent domain is used by

Accepted Answer

A)  the federal government. 
B)  state governments. 
C)  local governments. 
D)  All of the above are correct. 
A)  the federal government. 
B)  state governments. 
C)  local governments. 
D)  All of the above are correct.

The U.S. Constitution stipulates that when government uses its takings powers to acquire land for a project,

Explain why the transactions costs involved with trying to acquire 100 acres of land from one landowner are probably going to be less than the transactions costs involved with trying to acquire 10 acres of land from each of 10 different landowners.

Government's use of eminent domain is a solution to

Landowners whose property is seized through eminent domain share in the gains that result from the taking of their property.

Economists refer to a holdout as someone who refuses to produce a pure public good with private funds.

If the government seizes Lucy's property and resells it to Ethel,

When providing a good involves assembling several parcels of contiguous land, private individuals may encounter difficulty negotiating the purchase of those parcels.

In the United States, the powers of eminent domain are put forth in the Fifth Amendment to the Constitution.

In general, the more parties there are to a negotiation, the more difficult it becomes to successfully reach an agreement with all parties.

Some governments have adopted statutes that require, under certain circumstances, payment greater than fair market value be paid to property owners for property seized through eminent domain.

Under the conditions set for the taking of property by eminent domain, the government could take private property

The use of eminent domain to seize private property always results in an increase in cooperative surplus.

A condition for the use of eminent domain is that the property being taken

Eminent domain is used by

Fundamental Concepts in Economics

Cost-Benefit Analysis and the Value of a Life

Basic Game Theory: Games Between Two Players

Game Theory: Games Between Three or More Players

Free Exchange: Individual and International Trade

The Market System: Functions, Structure, and Institutions

The Nature of Pollution Problems

Government Policies to Regulate Pollution

Resource Depletion and Sustainability

Public Goods and the Role of Government

The Volunteers Dilemma: a Collective Inaction Problem

Voting: You Cant Always Get What You Want

The Economics of Health Insurance and Health Care

Segregation and Discrimination

Gross Domestic Product and the Wealth of Nations: an Introduction to the Macroeconomy

Unemployment

An Introduction to Money, Banks, and the Financial System

The Federal Reserve: Monetary Policy, Economic Activity, and Inflation

The Federal Government: Taxes, Spending, and Fiscal Policy

Income Inequality and the Redistribution of Income

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Exam 11: Public Goods: Tackling Large Projects and Eminent Domain

The U.S. Constitution stipulates that when government uses its takings powers to acquire land for a project,

Explain why the transactions costs involved with trying to acquire 100 acres of land from one landowner are probably going to be less than the transactions costs involved with trying to acquire 10 acres of land from each of 10 different landowners.

Government's use of eminent domain is a solution to

Landowners whose property is seized through eminent domain share in the gains that result from the taking of their property.

Economists refer to a holdout as someone who refuses to produce a pure public good with private funds.

If the government seizes Lucy's property and resells it to Ethel,

When providing a good involves assembling several parcels of contiguous land, private individuals may encounter difficulty negotiating the purchase of those parcels.

In the United States, the powers of eminent domain are put forth in the Fifth Amendment to the Constitution.

In general, the more parties there are to a negotiation, the more difficult it becomes to successfully reach an agreement with all parties.

Some governments have adopted statutes that require, under certain circumstances, payment greater than fair market value be paid to property owners for property seized through eminent domain.

Under the conditions set for the taking of property by eminent domain, the government could take private property

The use of eminent domain to seize private property always results in an increase in cooperative surplus.

A condition for the use of eminent domain is that the property being taken

Eminent domain is used by

Fundamental Concepts in Economics

Cost-Benefit Analysis and the Value of a Life

Basic Game Theory: Games Between Two Players

Game Theory: Games Between Three or More Players

Free Exchange: Individual and International Trade

The Market System: Functions, Structure, and Institutions

The Nature of Pollution Problems

Government Policies to Regulate Pollution

Resource Depletion and Sustainability

Public Goods and the Role of Government

The Volunteers Dilemma: a Collective Inaction Problem

Voting: You Cant Always Get What You Want

The Economics of Health Insurance and Health Care

Segregation and Discrimination

Gross Domestic Product and the Wealth of Nations: an Introduction to the Macroeconomy

Unemployment

An Introduction to Money, Banks, and the Financial System

The Federal Reserve: Monetary Policy, Economic Activity, and Inflation

The Federal Government: Taxes, Spending, and Fiscal Policy

Income Inequality and the Redistribution of Income

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