Related to the Economics in Practice : Valuing Land LOADING... In Orlando, Flori
ID: 1112657 • Letter: R
Question
Related to the Economics in
Practice:
Valuing Land
LOADING...
In Orlando, Florida, the land value went up dramatically when Disney built its theme park there.
How do you explain this land price increase?
A.
The land value could no longer be determined exclusively by the amount the highest bidder was willing to pay.
B.
The price of land increased because its potential for profit increased.
C.
The productivity of the land no longer exhibited diminishing marginal returns.
D.
The price of land increased because the supply of land is perfectly elastic.
E.
The price of land increased because the landowners could no longer charge pure rent.
Explanation / Answer
Answer:- In Orlando, Florida, the land value went up dramatically when Disney built its theme park there. How do you explain this land price increase?
Correct Answer:- The price of land increased because its potential for profit increased
Reason:- With the opening of Disney theme park, the nearby location has greater business opportunities as there will be greater in-flow of potential customers and thus profiting the chance of running commercial activities.