Question: Explain the relationship between scarcity of land and rent?
The scarcity of land creates a relationship with rent, where as the supply of land decreases and demand remains constant or increases, the price of rent increases. This is because the limited availability of land raises its value, and as a result, the cost of using it also increases. In economic terms, this is known as the law of rent, which states that the rent of a land parcel is equal to the difference between its productivity and the productivity of the least productive land in use. Therefore, the scarcer the land, the higher the rent that tenants must pay to access it.
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