As a business consultant, how would you explain to your client what determines the economic rent...

As a business consultant, how would you explain to your client what determines the economic rent for land?

Expert Solution

Economic rent implies the revenue that can be earned from land or other natural resources whose supply is fixed. It is over and above opportunity cost which is necessary to keep a resource in its current use. The economic rent for land can be determined with the help of its demand, it is the only active determinant because supply is fixed. Fixed supply implies that supply curve is perfectly inelastic. Increased demand cannot increase supply of land because it is a natural product that will always remain available in fixed quantity. Demand of land is determined by price of the product produced on land, land's productivity or the purpose for which it can be used, location of land, etc. So, economic rent will be determined by the intersection of demand curve & inelastic supply curve of land. This is shown in the figure drawn below which shows the demand curve as well as inelastic supply curve of land. When demand curve for land was , the economic rent was . As the demand curve shifts towards right from , the economic rent rises from . We can see that the supply of land remains fixed at , the change in economic rent was due to change in demand for land. So, the active determinant of economic rent for land is demand for land.

Rahul Sunny answered 1 year ago

what determines the economic rent for land?

Explain the concept of economic rent and how it differs from economic profit?

A ) Suppose you are working as an economic consultant and you are supposed to explain...

A ) Suppose you are working as an economic consultant and you are supposed to explain the consequences of the following cases to your clients. Answer each part separately. Suppose due to a war in a neighbouring country, the country received refugees which increased the labour force. Also, there is a huge reduction in global oil prices. By using the Aggregate Supply curve, show the possible effects of these two changes on the price level and aggregate output in the...

You are a financial consultant and have been asked to forecast how much revenue your client...

You are a financial consultant and have been asked to forecast how much revenue your client organization must generate per case to meet its financial requirements. Your client has provided you with the information below. You need to provide the following information to your client: The target case rate AND A brief analysis of the impact of a 5% reduction in the budgeted expense. Annual Case Volume Medicare 1,500 Cost-paying cases 600 Charge-paying cases 750 Charity care cases 150 Total...

You are a business consultant. You have just taken on a new client for Enterprises Pty...

You are a business consultant. You have just taken on a new client for Enterprises Pty Ltd, a manufacturer of cakes. Your client has just begun the process of setting up this business. A business plan has been produced, the target market identified, raw materials sourced and manufacturing premises located. The next step is to figure out how to finance the business, and the client has come to you for advice. Recommend the most appropriate sources of finance by using...

You are a business consultant at a small consulting firm in Sydney Australia. A client Ben...

You are a business consultant at a small consulting firm in Sydney Australia. A client Ben McDonald from office supplies retailer “Office Storeroom” has contacted you to ask for your help. Ben is the newly appointed sales manager at Office Storeroom. You arrange a meeting with Ben at a local coffee shop. During the meeting Ben explains that Office Storeroom is the longest running office supplies company in Australia, having started business in 1973. They pride themselves on providing the...

What have you learned so far about what determines prices such as the rent for an...

What have you learned so far about what determines prices such as the rent for an apartment? If people cannot afford rent, what are they to do? What are the consequences of controlling rent and for not controlling it? Is the current system fair?

You are working as a tax consultant in Mayfield, NSW. Your client is an investor and...

You are working as a tax consultant in Mayfield, NSW. Your client is an investor and antique collector. You have ascertained that she is not carrying on a business. Your client provides the following information of sales of various assets during the current tax year: (a) Block of vacant land. On 3 June of the current tax year your client signed a contract to sell a block of vacant land for $320,000. She acquired this land in January 2001 for...

Explain peak and trough? You are to administer carbamazepine to your client at 8am. What time would...

Explain peak and trough? You are to administer carbamazepine to your client at 8am. What time would you draw a peak level for this client? Mr. Smith is admitted with Signs and symptoms of a CVA (stroke). Treatment for CVAs include the use of a thrombolytic (clot busters) like TPA. When would the physician not give a Thrombolytic? What imaging test do you foresee will R/O (rule out) that contraindication? Your client had a gastrostomy tube insertion. What is the most certain way to...

Suppose you are working as an economic consultant and you are supposed to explain the consequences...

Suppose you are working as an economic consultant and you are supposed to explain the consequences of the following cases to your clients. Answer each part separately. a) (3 pts) Suppose due to a war in a neighbouring country, the country received refugees which increased the labour force. Also, there is a huge reduction in global oil prices. By using the Aggregate Supply curve, show the possible effects of these two changes on the price level and aggregate output in...

Question