PrepareFactors of Production · 1 min read
Land
Land
Land is any natural thing that we use to create goods or services. Land is a gift of nature used in production. It includes minerals, rivers, vegetation, rocks, etc. This means land is not just the soil, but also everything inside the earth and the water bodies around us.
The money a person gets for letting others use their land is called rent. The reward for land is rent. If you allow a farmer to use your ground or a company to dig for oil, the payment they give you is rent.
Characteristics of Land
Land is given to us by God or nature, not made by humans. It is a gift of nature. This means nobody can manufacture land in a factory; we just found it here on earth.
The total amount of land in the world cannot be increased or decreased. It is fixed supply. Even if we clear a forest, the total size of the earth stays the same.
If you keep adding more workers to a small piece of land, eventually the extra food you get will start to reduce. It is subject to the law of diminishing returns. This means after a certain point, putting more effort into one piece of land brings less and less profit.
You cannot pick up a plot of land in Lagos and move it to Kano. Geographically, land is immobile. While you can move the crops or the sand, the actual location of the land stays in one place.
One piece of land is always different from another piece of land. It is heterogeneous. This means a land in a fertile valley is not the same as a rocky land in the desert; they have different qualities.
Key points
- •Land is a gift of nature used in production, encompassing resources like minerals, rivers, and vegetation.
- •The economic reward for the use of land is known as rent.
- •Key characteristics of land include being a gift of nature and having a fixed supply.
- •Land is geographically immobile and subject to the law of diminishing returns.
- •Land is heterogeneous, meaning its qualities and characteristics vary from one location to another.