All the land in a California valley is owned by one person.The supply of land is fixed and is rented each year to farmers who bid for it in an open auction.Given the rents they must pay, the farmers barely earn subsistence.Sympathy for the poor farmers leads the state to bring in irrigation facilities to raise the productivity of the farms and raise the farmers' income.The most likely outcome is

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Quizplus · Accepted Answer

The supply of land is fixed, and the introduction of irrigation facilities will increase the productivity of the land, likely leading to higher bids in the open auction for the land. Since the farmers bid for the land each year, the increased productivity will likely result in higher rents, which will be captured by the landlord as the sole owner of the land. The farmers' costs (in terms of rent) may increase proportionally with the productivity gains, leaving their net income similar to before the introduction of irrigation, thus primarily benefiting the landlord.

All the Land in a California Valley Is Owned by One