Question

Give reasons "The supply of land is inelastic".

Answer 1

Ans. The supply of land is fixed or perfectly inelastic. From the society’s point of view, it is possible to reclaim land from sea, but the reclaimed land does not amount to increase in land, as sea is also considered as part of land.

Answer 2

Explanation:

The supply of land is totally inelastic

- This is because sellers can not respond by increasing supply to a price increase of the production factor as it can no longer be created. Sellers only sell what they have without the possibility of increasing supply after price increases.

- With an inelastic land supply, the real market rent is determined by what tenants are willing to pay instead of what landlords are spending. The price varies depending on the tenant's and landlords ' ability to accept the highest bidder