12/10/07 4:40 AMChapter 7Page 1 of 1http://www.sup.org/economiclaw/Chapter%207%20Problems.htmChapter 7Problems1. The case of Goldblatt v. Town of Hempstead (369 U.S. 590, 1962) involved a takings claim by the operator of a gravel pitwho was prohibited by a town ordinance from continuing to excavate from an open pit that had gone below the water table.Discuss how the court would evaluate the compensation question based on (1) the noxious use doctrine; (2) the diminutionof value test; (3) the nuisance exception; and (4) the efficient threshold rule.2. A developer owns a piece of beachfront land that he intends to develop for residential use. The private returns to thedeveloper are as follows:Return if developed $50,000Return if undeveloped $10,000Suppose that three nearby residents would sustain damages from beach erosion if the land is developed. Theirdamages would be as follows:Resident 1: $20,000Resident 2: $15,000Resident 3: $10,000(a)Is it efficient for the land to be developed?
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Land, The Residents, developer, Zoning, bargaining costs