1. Chapter 14
Land

2. Definition of Land
As a factor of production, land is anything provided by nature that helps in the production of output, including goods, services and wealth. The return to land is rent.

3. Economic Characteristics of Land
Land is fixed in supply.
Land doesn’t have any cost of production/the earnings of land are economic rent.
It is a non-specific factor of production.
The price of land does not affect the quantity available.
Lack of mobility.

4. Why is land considered to be a unique factor of production?
Land is a gift of nature and therefore has no cost of production to society as a whole.
It is fixed in supply – the supply of land as a whole of an economy is fixed.

5. Demand for Land
The demand for land is a derived demand, i.e. land itself is not demanded in its own right, but is sought for the goods it helps to produce.
The demand for land depends on its MRP.
High rents are caused by high prices.
Land use – goes to the highest bidder.

6. What are the factors that influence the price paid for land?
Demand for private houses
Road building
Business demand
Public amenities
Government intervention

7. What factors need to be considered before deciding where to locate a factory?
Labour and wage rates
Cost of land
Nature of the product
Weight losing
Weight gaining
Footloose
Availability of infrastructure
Government influence

8. David Ricardo (1172 – 1823)
The Principles of Political Economy and Taxation
Theory of rent
Law of comparative advantage
Accepted the subsistence wages theory/iron law of wages