Pure economic rent on land of fixed supply is a surplus which can be taxed without causing a decline in productive efficiency.

Question

Quizplus · Accepted Answer

Pure economic rent on land of fixed supply is a surplus that is not earned through any productive effort. Hence, it can be taxed without affecting the supply of land or the willingness of landowners to offer their land for rent. This is because the supply of land is fixed, and the landowner cannot increase or decrease the supply in response to changes in the tax rate. Therefore, taxing pure economic rent would not lead to a reduction in productive efficiency.

Pure Economic Rent on Land of Fixed Supply Is a Surplus