Question: The town of Lookout Mountain, Georgia, had become a desirable place to live, and property owners were subdividing some of their land within the city limits in order to build new homes. However, after some people complained about all of the new houses, the town's city council passed an ordinance requiring new homes to be built on at least one acre of land. (Before the ordinance, builders were constructing new houses on as little as a quarter acre of land.) Assuming ceteris paribus (and, unless told otherwise, we ALWAYS assume ceteris paribus), explain the effect this new ordinance will have on the following things:
A. The per-acre price of land located in Lookout Mountain, Georgia. Why?
B. The per-acre price of land located just outside the Lookout Mountain city limits. Why?
C. The post-ordinance price of new houses in Lookout Mountain relative to housing prices before the new ordinance was passed. Why?
D. Property tax revenues in Lookout Mountain after the ordinance was passed relative to what they would have been had there been no such ordinance. Why?