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Homework answers / question archive / Consider a residential city with a radius of 3 miles, where the value of land is higher closer the land is to the center
Consider a residential city with a radius of 3 miles, where the value of land is higher closer the land is to the center. Suppose that the city mayor is considering extending its radius from 3 miles to 5 miles (controlled urban growth program). Your job is to develop a self-financing program under which landowners who gain from the boundary extension compensate landowners who lose from it. For each of the following individuals, indicate whether he or she will be a compensator or compensatee, and whether the payment will be relatively large or relatively small.
a. Aysha owns land 3 miles from the city center. She is a compensate [or, ee], and the payment will be relatively [large, small] compared to other similarly situated landowners?
b. Rick owns land 1.5 miles from the center. He is a compensate [or, ee], and the payment will be relatively [large, small] compared to other similarly situated landowners?
c. Matt owns land 3.5 miles from the city center. She is a compensate [or, ee], and the payment will be relatively [large, small] compared to other similarly situated landowners?
a. As Aysha owns land 3 miles from the city center, she is a compensatee as the boundary extension is done from 3 miles to 5 miles. The payment will be relatively small compared to other similarly situated landowners as she is not much affected.
b. As Rick owns land 1.5 miles from the center, he is a compensator, because boundary extension is done from 3 miles to 5 miles. The payment will be relatively small compared to other similarly situated landowners because there is not much benefit to him.
c. As Matt owns land 3.5 miles from the center, she is a compensatee as the boundary extension is done from 3 miles to 5 miles. The payment will be relatively large compared to other similarly situated landowners as she is more affected.
