Chapter 29: Problem 6

The supply of land is (LOl) a) perfectly elastic c) relatively elastic b) perfectly inelastic d) variable in elasticity

Short Answer

Expert verified

The supply of land is best characterized as \(b)\) perfectly inelastic. This is because the overall quantity of land remains constant and limited, making the supply unresponsive to price changes.

Step by step solution

Understand the Concepts of Elasticity

Elasticity measures the responsiveness of supply or demand to changes in price. If the supply is responsive to price changes, it is considered elastic. On the other hand, if the supply is not responsive to price changes, it is considered inelastic.

Analyze Option a: Perfectly Elastic

If the supply of land was perfectly elastic, it would mean that any change in price would lead to infinite changes in the quantity supplied. In other words, landowners would be willing to supply any quantity of land at a specific price. This is not the case with land since its quantity is limited.

Analyze Option b: Perfectly Inelastic

If the supply of land were perfectly inelastic, it would mean that no matter how prices change, the supplied quantity of land remains constant. This is a more appropriate characterization for the supply of land since land is scarce and cannot be created or destroyed.

Analyze Option c: Relatively Elastic

If the supply of land were relatively elastic, it would signify that the supply is somewhat responsive to price changes, but not as much as in the case of a perfectly elastic supply. While there may be some possibilities for landowners to change the use of their land when the price changes, the overall quantity of land remains mostly constant.

Analyze Option d: Variable in Elasticity

Variable in elasticity means that the supply of land's responsiveness to price changes constantly. For land supply, this is not the case since the quantity is mostly constant.

Conclusion: Choose the Best Fit

Based on the above analysis, the supply of land is best characterized as \(b)\) perfectly inelastic. Although landowners may be able to make minor changes to the use of their property in response to price fluctuations, the overall quantity of land remains constant and limited, making the supply of land inelastic.

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