Paul Owns a Home on the Top of a Hill

question 119

Multiple Choice

Paul owns a home on the top of a hill and enjoys an unobstructed view of a large wooded area.The view was a large factor in his decision to buy the house and Paul values his view at $5,000 per month.Sid purchases the undeveloped wooded area with plans to build a retail shopping centre.Sid expects to earn $10,000 a month from the shopping centre,which is $3,000 more than his next best alternative.
-Refer to the information above.Assuming development of the land reduces the value of Paul's view to zero,then

• A) Paul's consumer surplus will not change.
• B) Paul will be worse off.
• C) Sid will offer to compensate Paul for his loss.
• D) Paul will be better off.
• E) Paul's consumer surplus will rise.

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Definitions:

Social Process

The pattern of growth and change in a society over time, involving the interaction between individuals and groups.

Interpersonal Issues

Problems or conflicts that arise in the course of interactions between individuals, often due to miscommunication, differences in values, or personality clashes.

Personal Comfort

The state of physical and psychological ease or well-being experienced by an individual, often influenced by environmental factors or personal preferences.

Power Distribution

The way authority, control, and decision-making are spread across an organization or society.