2/ Suppose that the willingness to pay for land is $500,000 per hectare (ha.) everywhere if used for farming. The willingness to pay (\$/hectare) for land used for residential purposes depends on the distance (d, in km.) from the CBD (i.e., d=0 ): WTPR =1,000,00010,000d a) Find d which would be the boundary of the suburban fringe of the city if land use was determined in a free market. b) If a greenbelt reduced the size of the residential area by 1km, relative to your answer in a), estimate the deadweight loss (i.e., cost of inefficiency) due to the fact that the land is not used to its highest and best use. c) If a greenbelt reduced the size of the residential area by 10km, relative to your answer in a), estimate the deadweight loss. What is the ratio of your answers to parts b) and c)? d) If a greenbelt reduced the size of the residential area by tkm., relative to your answer in a), estimate the deadweight loss as a function of t ? e) Suppose that the greenbelt extends 10km. inside the boundary computed in a). If a developer owned 1 hectare of farmland just inside the greenbelt, estimate the maximum they would be willing to pay a consultant who could guarantee to convert the allowed land use from farm to residential. (If you think that the WTP function is not a not straight line then you should be able to convince yourself that the simple formula is approximately correct if t is small and, with a bit of economic logic, decide whether the computation which assumes a straight line under- or over-estimates the cost if t is large.) 2/ Suppose that the willingness to pay for land is $500,000 per hectare (ha.) everywhere if used for farming. The willingness to pay (\$/hectare) for land used for residential purposes depends on the distance (d, in km.) from the CBD (i.e., d=0 ): WTPR =1,000,00010,000d a) Find d which would be the boundary of the suburban fringe of the city if land use was determined in a free market. b) If a greenbelt reduced the size of the residential area by 1km, relative to your answer in a), estimate the deadweight loss (i.e., cost of inefficiency) due to the fact that the land is not used to its highest and best use. c) If a greenbelt reduced the size of the residential area by 10km, relative to your answer in a), estimate the deadweight loss. What is the ratio of your answers to parts b) and c)? d) If a greenbelt reduced the size of the residential area by tkm., relative to your answer in a), estimate the deadweight loss as a function of t ? e) Suppose that the greenbelt extends 10km. inside the boundary computed in a). If a developer owned 1 hectare of farmland just inside the greenbelt, estimate the maximum they would be willing to pay a consultant who could guarantee to convert the allowed land use from farm to residential. (If you think that the WTP function is not a not straight line then you should be able to convince yourself that the simple formula is approximately correct if t is small and, with a bit of economic logic, decide whether the computation which assumes a straight line under- or over-estimates the cost if t is large.)