a) What is meant by MRP (marginal revenue product) with respect to property development? Explain how the concept of MRP is related to the value of the site and hence the intensity of land use. b) Why does improved productivity of capital (including labour), and/ or lower interest rates, increase the MRP? (An appropriate diagram is useful to bolster your explanation.) c) Use a diagram to illustrate how a change in the price of land relative to capital (including labour), will affect the demand for land and change the relative use of factors.
a) What is meant by MRP (marginal revenue product) with respect to property development? Explain how the concept of MRP is related to the value of the site and hence the intensity of land use. b) Why does improved productivity of capital (including labour), and/ or lower interest rates, increase the MRP? (An appropriate diagram is useful to bolster your explanation.) c) Use a diagram to illustrate how a change in the price of land relative to capital (including labour), will affect the demand for land and change the relative use of factors.
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter7: Production, Inputs, And Cost: Building Blocks For Supply Analysis
Section: Chapter Questions
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Transcribed Image Text:a) What is meant by MRP (marginal revenue product) with respect to property development? Explain how the concept of
MRP is related to the value of the site and hence the intensity of land use.
b) Why does improved productivity of capital (including labour), and/ or lower interest rates, increase the MRP? (An
appropriate diagram is useful to bolster your explanation.)
c) Use a diagram to illustrate how a change in the price of land relative to capital (including labour), will affect the demand
for land and change the relative use of factors.
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