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

According to the U.S. Constitution, if government seizes your land through eminent domain, it must be taken for public use.

Why would acquiring 20,000 acres of land in Florida to build an amusement park be more difficult than acquiring 20,000 acres of land in Florida to grow oranges?

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 Mariana purchases the needed land from Abe, Ben, Cat, and Don for the value she calculated the land to be worth, but Eva refuses to sell the land for the same price as the other 4 ranchers. Economists wold refer to Eva as a

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, Mariana will purchase

Lolita wants to purchase a beautiful art deco office building built in the 1920s, tear it down, and construct a rather bland, glass-and-steel office building that will confer $2 million of benefits to society. In its current state, the art deco office building is worth $1.7 million. Lolita goes to the city council with her proposal and tells the council members that the new office building will hold more tenants and therefore increase employment and tax revenues. If the city council agrees to use eminent domain to allow Lolita to proceed with her project, society as a whole will

What is eminent domain and what gives the government the authority to exercise eminent domain?

The government's authority to take private property for public use is referred to in economics as a land grab.

In general, it is easier to negotiate the purchase of noncontiguous parcels of land than it is to negotiate the purchase of similar land parcels that are contiguous.

Providing a good would likely be most difficult when the project involves assembling

In economics, a negotiator who hopes to get an unusually large amount of money for land by refusing to come to terms is called a(n)

What is a standard process used to determine fair market value of a property?

Eminent domain can help eliminate the holdout problem.

A Chinese restaurant wants to expand its business by acquiring a neighboring dry cleaner. In this case,

The takings clause indicates that private property can be seized only if the property in question is being taken for public use. Does "public use"mean using seized property only for pure public goods and services? Explain your answer.

What does the takings clause indicate as far as why and how private property can be seized?

In terms of which party or parties capture any gains from a land transaction, what is the difference when land is acquired through eminent domain and when land is acquired through the bargaining process?

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 $600,000, the economic pie will

Which standard states that "the owner is entitled to receive 'what a willing buyer would pay in cash to a willing seller' at the time of the taking"?

The method of determining the value of land by determining what similar properties have sold for in the recent past is called the ________.

Arturo actually values his home at $120,000 and claims he values the home at $120,000. In an eminent domain situation, the government would pay Arturo ________ for his home.