CEVAP:

Like all other factors of production, the price of land which is land rent is determined in the land market. Thus, we can use supply and demand analysis to determine the equilibrium price of a specific land. The following assumptions related to the land market are made for the purpose of analysis. First of all, there is no quality differences between any acres of land, meaning that each acre of land is productive as every other acre. Secondly, all land is used just for one purpose, for example, producing carrots. Finally, the land is rented or leased in a competitive market.