Land Rent ($) C 0 D₁ D₂ D₂ Acres of Land Which of the following statements is true of land as shown in the diagram? A. It would be a free resource in the case of all four demand curves. B. It would be an economic (scarce) resource in the case of all four demand curves. C. It will cease to be used in production if demand falls below D4. D. It would be a free resource if demand is D4 or less.
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- How does the economist’s use of the term “rent” differ from everyday usage? Explain: “Though rent need not be paid by society to make land available, rental payments are useful in guiding land into the most productive uses.”Specify and explain the typical shapes of marginal-benefifit and marginal-cost curves. How are these curves used to determine the optimal allocation of resources to a particular product? If current output is such that marginal cost exceeds marginal benefifit, should more or fewer resources be allocated to this product? Explain.An increase in land rents a. will lead to an increase in the marginal revenue product of all inputs used in production except for the land. b. will lead to an increase in the marginal revenue product of all inputs used in production on the land. c. will lead to land to be used less intensively as its marginal revenue product has decreased. d. will bring some previously zero-rent land into productive use.
- 16. How prices allocate resources Suppose that there are three plots of mountain resort land available for sale in Stowe and six potential buyers, each interested in purchasing one plot. Assume that all of the plots are basically indistinguishable and that the minimum selling price of each is $445,000. The following table lists each potential buyer's willingness and ability to purchase a plot of land. Person Ana Kevin Maria Rajiv Simone Yakov Ana Which of these people will purchase one of the three mountain resort plots? Check all that apply. Kevin Maria Rajiv Willingness and Ability to Purchase (Dollars) 380,000 Simone Yakov 600,000 510,000 470,000 420,000 390,000 Now, assume that the three mountain plots have been sold to the people that you indicated in the previous section. Suppose that a few weeks after the last of those mountain plots is sold, another basically identical mountain plot goes on the market for sale at a minimum price of $432,500. This fourth plot be sold, because…18. How prices allocate resources Suppose that there are three plots of mountain resort land available for sale in Park City and six potential buyers, each interested in purchasing one plot. Assume that all of the plots are basically indistinguishable and that the minimum selling price of each is $595,000. The following table lists each potential buyer's willingness and ability to purchase a plot of land. Person Andrew Beth Lorenzo Neha Sam Teresa Which of these people will purchase one of the three mountain resort plots? Check all that apply. Andrew Willingness and Ability to Purchase (Dollars) 540,000 530,000 750,000 660,000 620,000 570,000 Beth LorenzoContinuing from Exercise 7.1, the films factory sits on land owned by the firm that it could rent for 30,000 per year. What was the films economic profit last year?
- 3. Optimal use of multiple inputs. In his shop, Jim Valenti retrofits sunroofs into automobiles. The process can use a combination of skilled labor and unskilled labor. Given his current mix of employees, the marginal product of the last unit of skilled labor is 4 sunroofs per day, and the marginal product of the last unit of unskilled labor is 1 sunroof per day. Current market rates for skilled and unskilled labor is $40 and $20, respectively. Is Julian using a least cost combination of inputs? If not, which of type of labor should he use relatively more? Comparison Expression: Result:3. David Ricardo has developed The Theory of Rent due of issues of Corn Laws, simple briefly the impact of rent land based on: A. Extensive margin of cultivation B. Intensive margin cultivation4) A manufacturing firm produces power drills that it sells at a market price of $100/drill and ships to markets around the country out of a central freight terminal. Intermediate inputs cost $10/drill. It costs the firm $1 per mile to ship each drill from the factory at location X to the freight terminal. Direct labor costs are $20/drill and one-way commuting cost is $1/mile from the residential zone that is 8 miles from the central freight terminal. a) What is the firm's bid rent curve for land, r(x)? b) What rent is the firm willing to pay at X=2? c) Suppose commuting costs increase from $1 to $2 per one-way mile. Find the new bid rent curve for land. d) What rent is the firm willing to pay at X=2?
- A manufacturing company leases a building for $100,000 per year for its manufacturing facilities. In addition, the machinery in this bullding is being pald for in Installments of $20,000 per year. Each unit of the product produced costs $15 in labor and $10 in materials. The product can be sold for $40. Using this information, answer the follwoing questions. 1. 8,000 2. $30,000 3. 4,800 How many units per year must be sold for the company to breakeven? 4. 5,019 If 10,000 units per year are sold, what is the annual profit? 5. 6,667 Sheridan 6. $50,000 7. $80,000 8. $100,00018. How prices allocate resources Suppose that there are three plots of mountain resort land available for sale in Interlaken and six potential buyers, each interested in purchasing one plot. Assume that all of the plots are basically indistinguishable and that the minimum selling price of each is $745,000. The following table lists each potential buyer's willingness and ability to purchase a plot of land. Person Clancy Eileen Hubert Kate Manuel Poornima Willingness and Ability to Purchase (Dollars) 900,000 810,000 770,000 720,000 690,000 680,000Explain the term resource in economics