Factors of Production: Land

JSK 252

Hi. I was just revising factors of production for the leaving certificate and when I was revising land, what baffled me was one of the reasons land is a unique factor of production is that its a gift of nature and therefore has a zero supply price. But this aint entirely true is it? because people are buying and trading land? so it doesnt have a 0 supply price.

Am I interpreting it from a different angle?

Time Magazine

Trading land isn't the same thing as supplying land. The supply of land, to a certain extent, is fixed. Society inherited it; we didn't have to pay for it.

SimpleSam06

JSK 252 wrote: »

Hi. I was just revising factors of production for the leaving certificate and when I was revising land, what baffled me was one of the reasons land is a unique factor of production is that its a gift of nature and therefore has a zero supply price. But this aint entirely true is it? because people are buying and trading land? so it doesnt have a 0 supply price.

Am I interpreting it from a different angle?

Have a root through accom/prop, I posted an article there a while back which detailed at great length the methods of land valuation at all levels.

SimpleSam06

Eh here it is...

JSK 252

The Economist wrote: »

Trading land isn't the same thing as supplying land. The supply of land, to a certain extent, is fixed. Society inherited it; we didn't have to pay for it.

But the supply price of a factor of production is the minimum prcie to bring a f.o.p into existence and to sustain it in that employment. Land has a minimum price.

JSK 252

SimpleSam06 wrote: »

Eh here it is...

Very interesting. Thanks.

Time Magazine

JSK 252 wrote: »

But the supply price of a factor of production is the minimum prcie to bring a f.o.p into existence and to sustain it in that employment. Land has a minimum price.

Not really.

If Ireland wants to get me to engage in labour, it will have to give me something in return, i.e. a wage. Ireland did not have to give anything to anyone to inherit its physical space. Sure, we change our minds on how to distribute it afterwards. But that's more like me and my brother swapping jumpers, nothing is actually produced.

JSK 252

The Economist wrote: »

Not really.

If Ireland wants to get me to engage in labour, it will have to give me something in return, i.e. a wage. Ireland did not have to give anything to anyone to inherit its physical space. Sure, we change our minds on how to distribute it afterwards. But that's more like me and my brother swapping jumpers, nothing is actually produced.

Thats true I suppose.;) but I hate the way its defined as a gift of nature. Its like as though its a present!

But something doesnt necessarily have to be produced. Land is like a raw steak. To do anything with it you have to cook it in the same way I would have to build a factory on the land to make jumpers so that you can swap them with your brother!

Time Magazine

JSK 252 wrote: »

I hate the way its defined as a gift of nature. Its like as though its a present!

The jumper had to be produced by humans. Productive processes went to work there. No productive processes went into making Co. Cavan. Evidently :pac:

But something doesnt necessarily have to be produced. Land is like a raw steak. To do anything with it you have to cook it in the same way I would have to build a factory on the land to make jumpers so that you can swap them with your brother!

Nobody is claiming land is "the final product"; but it is necessary to initially have the raw steak in the first place. It is a factor of production, and it is different to labour/capital/enterprise insofar as the world inherited it without effort.

Of course in real economics we only really consider two factors of production: labour and capital. The LC distinction of land (as distinct from capital) and enterprise (as distinct from labour) is a pile of ghey, but one you'll have to put up with until June

JSK 252

The Economist wrote: »

The jumper had to be produced by humans. Productive processes went to work there. No productive processes went into making Co. Cavan. Evidently :pac:

Nobody is claiming land is "the final product"; but it is necessary to initially have the raw steak in the first place. It is a factor of production, and it is different to labour/capital/enterprise insofar as the world inherited it without effort.

Of course in real economics we only really consider two factors of production: labour and capital. The LC distinction of land (as distinct from capital) and enterprise (as distinct from labour) is a pile of ghey, but one you'll have to put up with until June

Haha. Looks like I will have to. Thanks again anyway!

Time Magazine

JSK 252 wrote: »

Haha. Looks like I will have to. Thanks again anyway!

You're welcome. Best of luck.

Économiste Monétaire

Are they still going on about Giffen goods in Leaving Cert economics? I bet they use the potato in the famine as an example...

JSK 252

Économiste Monétaire wrote: »

Are they still going on about Giffen goods in Leaving Cert economics? I bet they use the potato in the famine as an example...

Goods of low income consumption. Completely disobey the law of demand. They have a positive substitution effect, a negative income effect and weighing all things out the negative price effect dominates.

eg. bread ( not potatoes unfortunately:pac:)

regob

JSK 252 wrote: »

Goods of low income consumption. Completely disobey the law of demand. They have a positive substitution effect, a negative income effect and weighing all things out the negative price effect dominates.

eg. bread ( not potatoes unfortunately:pac:)

potatoes is a giffen good

Time Magazine

I sincerely doubt that either bread or potatoes are Giffens, really. At least not in Ireland in 2008.

Économiste Monétaire

regob wrote: »

potatoes is a giffen good

No good has ever been illustrated in reality as being a Giffen good. There was the idea that rice in China was, but I believe it turned out to be an arithmetic error (trying to illustrate it with the Slutsky equation).

regob

Économiste Monétaire wrote: »

No good has ever been illustrated in reality as being a Giffen good. There was the idea that rice in China was, but I believe it turned out to be an arithmetic error (trying to illustrate it with the Slutsky equation).

ahhh ok

i have just always recognised giffen goods as being bread rice and potatoes

Économiste Monétaire

regob wrote: »

ahhh ok

i have just always recognised giffen goods as being bread rice and potatoes

Well, they can be in theory. When you have very few, or no, substitutes for the good and you have an extreme negative income effect. It's just never been observed in the big bad world to satisfy those conditions. The potato famine was the best example for a while; then someone realised you can't have regular supply function in a famine...

JSK 252

regob wrote: »

potatoes is a giffen good

I was referring to the example my teacher gave me. Of course potatoes is an example.

regob

your a leaving certificate economist dont be acting like ya no everything

Économiste Monétaire

JSK was agreeing with you, Regob. The examples are the same every year. A second year undergraduate doesn't know everything, either, by the way. No one person has all encompassing knowledge of all areas :rolleyes:

regob

i know that i just didnt like the way he put it, sorry jsk