Assume a city has strict use zoning that separates the city into residential and commercial districts.Because of covid, the demand for commercial space has fallen, so the city is considering adopting mixed-use zoning throughout the city (that is, permitting both residential and commercial uses).

a. Under what conditions would such a zoning proposal be inefficient?

b. Given your answer to a, do you think the proposal would enhance or undermine efficiency?

c. How do you expect the rezoning to affect land values in areas formerly zoned for commercial uses?