This exercise adopts the common meaning of “rent”, to denote the
payment made to be able to use something (here, land) for a given
amount of time (here, one year). The exercise illustrates: (i) how
rent is determined in a competitive market, (ii) the relation
between land rent and landprice, and (iii) the distinction between
“pure” rent and quasi-rent.
There is a fixed stock of unimproved land, L = 10. The annual
value of marginal product of land is 20...