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

Question

Quizplus · Accepted Answer

Since the supply of land is fixed and rented each year, the rent paid by farmers will increase due to the increase in productivity. This means that the landlord, who owns all the land, will be able to charge higher rent and benefit from the increased productivity. As a result, only the landlord will prosper, and the farmers will continue to earn subsistence despite the increased productivity.

All the Land in a California Valley Is Owned by One