To an individual firm or landowner, land rents do not appear to be a surplus because

Question

Quizplus · Accepted Answer

Land rents represent a real cost of production because a given parcel of land has alternative uses, and the rent paid represents the opportunity cost of using that land for its best alternative use. To the landowner, it may not appear as a surplus because they must give up the rent to use the land themselves or rent it out to someone else. Land may be a productive resource, but its supply is perfectly inelastic, meaning its price is determined by demand rather than supply. Even though landowners typically have some degree of political and economic power, this does not affect the fact that land rents represent a cost of production.

To an Individual Firm or Landowner, Land Rents Do Not