Asked by Thomas Ramirez on May 30, 2024
Verified
Under an upward sloping supply curve for land, the economic rents to land ________ as the demand for land shifts rightward.
A) decrease
B) increase
C) remain the same
D) We do not have enough information to answer this question.
Economic Rents
Earnings in excess of the economically or socially necessary cost of bringing a factor of production into use.
Supply Curve
A graphical representation showing the relationship between the price of a good or service and the quantity of that good or service that a supplier is willing and able to supply.
Demand For Land
The desire, backed by purchasing power, for the use or ownership of land, which is influenced by various economic and societal factors.
- Acquire knowledge on the notion of economic rent and what determines it.
Verified Answer
SK
Sigrid KleiveMay 31, 2024
Final Answer :
B
Explanation :
Economic rent is the difference between the amount paid for the use of the land and the minimum amount required to bring that land into production. An upward sloping supply curve for land means that as the demand for land increases, the price for land also increases. As a result, the economic rent to landowners increases because they can charge more for the use of their land. Therefore, the correct answer is B, which indicates that economic rents to land increase as demand for land shifts rightward.
Learning Objectives
- Acquire knowledge on the notion of economic rent and what determines it.