Bank CEOs predict that farmland prices will fall by 3.1 percent over the next 12 months. Lower
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Bank CEOs predict that farmland prices will fall by 3.1 percent over the next 12 months. Lower farm income resulted in tighter restrictions on bank loans to farmers.
a. Why does the price of farmland reflect farm incomes? In your answer include a discussion of the demand for and supply of land.
b. Use a graph to show why the price of farmland is expected to fall.
c. Is the supply of farmland perfectly inelastic?
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