Question

Why does a fixed resource such as land attract profits?

Answer 1

In Economics, the word ' land' is used, as is usually understood, not merely in the sense of the earth's soil or surface. This stands for nature as a whole, living and dead. This requires all the natural resources we are able to free ourselves from air, water and land. This protects the surface of the earth, whether flat or mountainous.

This includes oceans, lakes and rivers, mineral deposits, precipitation, water power, agriculture, forestry, and many other items that nature provides and that man uses. The word ' land' thus includes all that nature has produced on earth, above the moon, and below the surface of the earth.

Land is of immense importance as a factor of production. Everything we use can ultimately be traced to land, as has already been pointed out. Land can rightly be called all material wealth's original source. A country's economic stability is closely related to the production of its natural resources.

In general, it's true to say that what nature has made it is a country. Because of some unfavorable factors, a country, rich in natural resources, can remain poor (e.g., India). But if nature is unkind and hasn't given a country rich resources, making it prosperous won't be easy.

The main economic advantage of the country is scarcity. Many investors who buy land do so in order to develop it, often for real estate, such as commercial or residential developments subject to zoning orders. Investing in raw land can produce significant future cash flows that can be easily predicted once secured, but it can be costly and uncertain to develop land. Associated risks can result from taxation, restrictions on regulatory use, leasing and selling the associated land, and even natural disasters.