Asked by Camila Ramirez on Apr 28, 2024
Verified
If land becomes more valuable in residential use than in commercial use,
A) the supply of land available for commercial use should decrease and the supply of land for residential use should increase.
B) there can be no change in the allocation of land because land is fixed in supply.
C) there will be no change in the allocation of land, as there is no responsiveness to price changes by suppliers of land.
D) the supply of land for commercial use will become perfectly elastic, and the supply of land for residential use will become perfectly inelastic.
Residential Use
Pertains to property or resources utilized for dwelling purposes, including houses and apartments designed for people to live in.
Commercial Use
The use of products, services, or information for business purposes or financial gain, as opposed to personal or educational use.
- Identify the effects of changes in the value of land use on the supply of land for different purposes.
Verified Answer
PS
Priyanshu SinghApr 29, 2024
Final Answer :
A
Explanation :
When land becomes more valuable in residential use than in commercial use, owners are incentivized to convert their land to residential use to maximize its value. This leads to an increase in the supply of land for residential purposes and a decrease in the supply for commercial purposes, as landowners respond to the change in relative profitability. Choices B, C, and D do not accurately reflect how the market for land typically responds to changes in value between different uses.
Learning Objectives
- Identify the effects of changes in the value of land use on the supply of land for different purposes.