The diagram shows the supply curve for land. The supply of land is perfectly inelastic because
Question 1 Report
The diagram shows the supply curve for land. The supply of land is perfectly inelastic because
Answer Details
The correct answer is the total quantity of land available is fixed and cannot be increased. The supply of land (in the economic sense of natural resources and physical territory) is fixed by nature. No matter how high the price rises, the total area of land on Earth cannot be expanded. This means the supply curve for land is a vertical line, indicating perfectly inelastic supply (price elasticity of supply equals zero).
While it is true that the price of land changes with demand, this describes movement along the demand curve, not the reason for the vertical supply curve. The fact that land can be used for many different purposes relates to occupational mobility, not supply elasticity. Variation in demand between urban and rural areas affects relative prices but does not explain why total supply is fixed.
Download The App On Google Playstore
Everything you need to excel in your exams
