Consider a competitive market for land, in which supply is perfectly inelastic 

Consider a competitive market for land, in which supply is perfectly inelastic (the amount of land supplied is finite), and the demand curve has a standard shape.

Consider a competitive market for land, in which supply is perfectly inelastic

Activity submission: Apply your knowledge of supply and demand in perfectly competitive markets

Guidelines
Firstly, there 3 questions in this assignment.

Secondly, make sure that you have carefully read and fully understood the questions before answering them. Answer the questions fully but concisely and as directly as possible. Follow all specific instructions for individual questions (e. g. “list”, “in point form”).

Thirdly, answer all questions in your own words. Do not copy any text from the notes, readings or other sources. The assignment must be your own work only.

Plagiarism declaration:

1. I know that plagiarism is wrong. Plagiarism is to use another’s work and pretend that it is one’s own or to fail to cite references when necessary.
2. This assignment is my own work.
3. I have not allowed, and will not allow, anyone to copy my work with the intention of passing it off as his or her own work.
4. I acknowledge that copying someone else’s assignment (or part of it) is wrong, and declare that my assignments are my own work.

2. Mark allocation
Please see rubric below.
Total: 33 marks

3. Questions

Reminder:

You are not required to conduct independent research for this submission. However, if you wish to make use of additional sources outside of the course material, you will need to reference these sources correctly. Please consult the Course Handbook in the Orientation Module for guidance on referencing requirements.

In-text citations and reference lists are not included in the word count of your submission.

Question 1

Revise the sets of notes included in Units 1 to 3 before attempting this question.

Consider a competitive market for land, in which supply is perfectly inelastic (the amount of land supplied is finite), and the demand curve has a standard shape.

Suppose the government needs X units of land for development purposes, and has two options to obtain the land required. The first option is to expropriate the land, i.e. take the land from the owners without compensating them. This will shift the supply curve to the left, as there will now be fewer units of land available in the market. The second option is for government to participate in the competitive market, shifting overall demand for land to the right while paying the resulting equilibrium price for the land it buys.

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