Check Your Understanding

1. Question

   Explain how each of the following events would affect the equilibrium rental rate and the equilibrium quantity in the land market.

   1. Developers improve the process of filling in coastal waters with rocks and soil to form large new areas of land.

   2. New fertilizers improve the productivity of each acre of farmland.

2. Question

   Explain the following statement: “When firms in different industries all compete for the same land, the marginal revenue product of the last unit of land rented will be equal across all firms, regardless of whether they are in different industries.”