If Land Becomes Less Valuable in Residential Use Than in Commercial

question 123

Multiple Choice

If land becomes less valuable in residential use than in commercial use

• A) the supply of land available for commercial use should increase and the supply of land for residential use should decrease.
• B) there can be no change in the allocation of land because land is fixed in supply.
• C) there will be no change in the allocation of land, as there is no responsiveness to price changes by suppliers of land.
• D) the supply of land for commercial use will become perfectly inelastic and the supply of land for residential use will become perfectly elastic.

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Definitions:

Economic Profit

is the surplus or gain realized when the total revenues generated by a business exceed the explicit and implicit costs of operation.

Average Total Cost

The sum of all production expenses divided by the amount of products made.

Units

Basic measures or quantities, such as length, mass, time, etc., that serve as standards for expressing and comparing quantities.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the number of units produced.