MODULE 70

The Markets for Land and Capital

In this Module, you will learn to:

• Determine supply and demand in the markets for land and capital

• Find equilibrium in the land and capital markets

• Explain how the demand for factors leads to the marginal productivity theory of income distribution

In Figure 69.1 we saw the factor distribution of income and found that approximately 69% of total income in the economy took the form of compensation for employees. Because labor is such an important resource, it is often used as the example in discussions of factor markets. But land and capital are critical resources as well, and their markets have unique characteristics worthy of examination. In this module we look more closely at the markets for land and capital before moving on to discuss the labor market further in Module 71.