QUESTION 13 Figure A Rental rate (dollars per day) Figure 8 Rental rate (dollars

Question

QUESTION 13 Figure A Rental rate (dollars per day) Figure 8 Rental rate (dollars per day) 0 Quantity of resource 0 Quanity of resouree Refer to the figures above to answer this question. Figure represents the market for because its supply is- . A; land; perfectly inelastic because the quantity of land is fixed B; land: elastic as predicted by the Hotelling Principle O A; a nonrenewable resource; inelastic because reserves can always be discovered OB a nonrenewable resource; demand changes as the economy changes B: land: inelastic given only a limited amount of land is available

Explanation / Answer

Option 1. A; Land, perfectly inelastic because the quantity of land is fixed.

Explanation: Figure A shows a vertical supply curve. It means the supply remains the same irrespective of the price i.e. the supply curve is perfectly inelastic. The land has a perfectly inelastic supply curve as the supply of land is fixed and new land cannot be created.

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