What does it mean to say that land rent is price determined, not price determining?
Question:
What does it mean to say that land rent is price determined, not price determining?
Price Determination:
Price determination is a term that refers to decisions on the cost of services rendered and the goods that are sold in the free market. The forces of demand and supply determine the prices of commodities in the free market.
Answer and Explanation: 1
Land rent is price determined and not price-determining as it is the price of other commodities that affect land rent. The demand for varied commodities on land and their prices lead to an increased demand for land, eventually increasing the land's rent. This is because the land is a production factor, and it has a fixed supply and a derived demand. This leaves the demand for land as the only determinant for its price. High demand for land means high prices, and a low demand reduces the land price.
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Price Selection: How Businesses Select the Correct Price for Products
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Chapter 11 / Lesson 8
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Price selection is an important part of the marketing mix. Explore the different strategies businesses use to select the correct price for products, including price skimming, penetration pricing, and status quo.
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