Answer the following statement true (T) or false (F)
1) Demand is the active and supply the passive determinant of land rent.
2) Different rents on land reflect differences in the marginal revenue product of land.
3) The free-land era of U.S. history reflected a situation in which the quantity of land available at a zero price exceeded the quantity of land demanded.
4) Rent performs an incentive function, but no rationing function.
5) The interest rate is the price paid for the use of money.
Answer:
1) True
2) True
3) True
4) False
5) True
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Bill lives in Montana and likes to grow zucchini. He applies fertilizer to his crops twice during the growing season and notices that the second layer of fertilizer increases his crop, but not as much as the first layer. What economic concept best explains this observation?
a. The law of diminishing marginal utility. b. The law of diminishing returns. c. Return equalization principle. d. The principal-agent problem.
Crowding out refers to the effect that:
A. C and I are indirectly affected by changes in G. B. C is directly affected by changes in G. C. C and I are directly affected by changes in G. D. C and I are completely unrelated to changes in G.