REAL 4000: Test 2 UGA Questions
with Complete Solutions.
Police power - Answer ability of government to regulate private actions in order to protect
the health, safety, and welfare of its citizens
sources of market failures - Answer monopoly, Externalities, incomplete information
locational monopoly - Answer the fact that every property occupies a unique location
Why monopoly a market failure? - Answer The ability of the landowner to hold out for more
money when the property is needed for a development project.
Landowner vs. Public Project - Answer Extracts personal gain at the expense of the other
residents.
positive externalities - Answer make surrounding properties more valuable.
Ex- adding a wall-mart increases retail value of nearby property
negative externalities - Answer make surrounding properties less valuable
ex-high traffic counts can make residential property less valuable
The reduction of negative externalities is the goal of? - Answer zoning and most other land-
use controls enacted by local governments.
Incomplete Information / Information Asymmetries - Answer The seller of a property typically
has more
information about the property than the buyer.
ways to overcome informational problems - Answer building codes and required seller
disclosures
Eminent Domain - Answer The government's power to acquire land for public use as long as
just compensation is paid to the owner.
, condemnation - Answer The legal process of exercising eminent domain
What does the government have to prove in order to
exercise this power? - Answer The land is needed for a public use.
The landowner has been justly compensated based on fair market value
Inverse Condemnation - Answer Landowner sues the government seeking to force
condemnation of their property and, therefore, to receive just compensation for what they view
to be a taking by the government.
General principle of Inverse Condemnation - Answer So long as the owner is left with an
ability to generate a return on the property, compensation is NOT required.
Building Codes - Answer Detailed standards for the construction of new
buildings and alteration of existing ones.
What purpose do building codes serve? - Answer Promotion of public health and safety
Promotion of energy conservation
stringency - Answer major determinant of the cheapest housing that can be built in a
community.
Zoning - Answer Regulation of land use, population density, and building size by creating
geographical districts of similar uses
Zoning regulations typically focus on regulating two
things: - Answer Permitted Uses and Development Density
Permitted Uses - Answer Which uses are allowed for a particular site
Development Density - Answer How much space can be built on a particular site.
Rezoning - Answer Want to use the site in a way that is not allowed by the current zoning
classification
with Complete Solutions.
Police power - Answer ability of government to regulate private actions in order to protect
the health, safety, and welfare of its citizens
sources of market failures - Answer monopoly, Externalities, incomplete information
locational monopoly - Answer the fact that every property occupies a unique location
Why monopoly a market failure? - Answer The ability of the landowner to hold out for more
money when the property is needed for a development project.
Landowner vs. Public Project - Answer Extracts personal gain at the expense of the other
residents.
positive externalities - Answer make surrounding properties more valuable.
Ex- adding a wall-mart increases retail value of nearby property
negative externalities - Answer make surrounding properties less valuable
ex-high traffic counts can make residential property less valuable
The reduction of negative externalities is the goal of? - Answer zoning and most other land-
use controls enacted by local governments.
Incomplete Information / Information Asymmetries - Answer The seller of a property typically
has more
information about the property than the buyer.
ways to overcome informational problems - Answer building codes and required seller
disclosures
Eminent Domain - Answer The government's power to acquire land for public use as long as
just compensation is paid to the owner.
, condemnation - Answer The legal process of exercising eminent domain
What does the government have to prove in order to
exercise this power? - Answer The land is needed for a public use.
The landowner has been justly compensated based on fair market value
Inverse Condemnation - Answer Landowner sues the government seeking to force
condemnation of their property and, therefore, to receive just compensation for what they view
to be a taking by the government.
General principle of Inverse Condemnation - Answer So long as the owner is left with an
ability to generate a return on the property, compensation is NOT required.
Building Codes - Answer Detailed standards for the construction of new
buildings and alteration of existing ones.
What purpose do building codes serve? - Answer Promotion of public health and safety
Promotion of energy conservation
stringency - Answer major determinant of the cheapest housing that can be built in a
community.
Zoning - Answer Regulation of land use, population density, and building size by creating
geographical districts of similar uses
Zoning regulations typically focus on regulating two
things: - Answer Permitted Uses and Development Density
Permitted Uses - Answer Which uses are allowed for a particular site
Development Density - Answer How much space can be built on a particular site.
Rezoning - Answer Want to use the site in a way that is not allowed by the current zoning
classification
