Question
A piece of land has a market value of $4,000 if used for agricultural purposes. A land speculator buys some of the land, paying $6,000
A piece of land has a market value of $4,000 if used for agricultural purposes. A land speculator buys some of the land, paying $6,000 an acre. Five years later she sells it to a house builder for $14,000 an acre. The builder builds a house for $100,000 and sells it (and the land on which it sits) to a homeowner two years later for $136,000. Assuming the land market and housing market are both competitive and that there was no inflation during all of this, what is the total land rent in houses, and how was that rent distributed among farmer, speculator, builder, and homeowner
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