econ 522 F2019 hw 1 (2).pdf - Econ 522 u2013 Economics of...

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Econ 522 – Economics of Law – Fall 2019 – Dan Quint Homework 1 – Efficiency Due at midnight, Thursday night, September 19 Homework should be submitted electronically via the dropbox on Canvas. Contact the professor if you have any problems with submission. Be sure to confirm that your file uploaded successfully! As I mentioned in lecture/on the syllabus, feel free to work together on these problems, but please WRITE UP YOUR OWN ANSWERS. QUESTION 1 – Efficient Allocation I own a plot of land in northern Wisconsin, on which I vacation. My next-door neighbor wants my land as well, to expand his own house. The value of the land to me is $150,000. (That is, I would be indifferent between keeping the house, and losing the house but having $150,000.) The value of the land to my neighbor is $275,000. Which of the following are Kaldor-Hicks improvements? (i)My neighbor buys my land for $200,000 (ii)My neighbor buys my land for $275,000 (iii)My neighbor pressures the town council to force me to sell him the land for $125,000 (iv)My neighbor, while drunk, buys my land for $350,000

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