A . What will happen to rents earned by landowners if population grows? Why? b. Will population growth ensure rents for all landowners? Explain
a . An increase in the population will shift the demand curve for land to the right, increasing the rents
earned by landowners.
b. Growth will not necessarily ensure rents for all. If the supply price of land is not everywhere $0, then
differential land rents will emerge. The market price for land will be determined by the intersection of
the supply and demand curves for land. Landowners whose supply price is below this market price will
earn rent equal to the difference between these two prices. Landowners whose supply price is equal to
the market price will not earn rent.
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