Problem
A parcel of land in a commercial district is worth $500,000, but the city unexpectedly announces plans to rezone the land for residential use, in which case its value is $300,000. The owner sells the property after the announcement but before the rezoning occurs. How much would a buyer pay if she expects to prevail in a claim for compensation with probability .5? What is the resulting loss to the seller from the zoning change?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.