THE RENT AND VALUE OF FARM LAND 61 



facilities ? change in the technique of farming ? rise in the general 

 level of prices ? 



38. Does the value of inferior lands (e.g., swampy, semi-arid, 

 rough) tend to be higher or lower today, compared with the prices of 

 the better lands, than it was ten or twenty years ago? Give full 

 reasons for your answer. 



39. What was the value of " abandoned " farms twenty years ago ? 

 Why were they abandoned ? What is their value today ? Why ? 



PROBLEMS 



1. "Rent tends to vary inversely with (1) efficiency of managers, 

 workmen, and equipment in competing regions as a whole, (2) prices 

 of farm equipments, wages, and other operating costs, and (3) the 

 abundance of good land." Are these propositions true? If so, 

 explain and illustrate. If not, point out any errors. 



2. Suppose that wheat is raised by a uniform system of extensive 

 cultivation and that the demand is such as to take 300 units (of a 

 million bushels each) at a price which would pay the current rate of 

 wages to one- third of a day's labor (and its suitable capital equipment). 

 The wheat land is of three grades, A, B, and C. On the first, 100 

 days' labor will produce 300 units of produce; on the second, 100 

 days' labor will produce 250 units; and on the third it will produce 

 200 units. Under these conditions how many grades of land will be 

 used? Will rent be paid? How much? Suppose the increase of 

 home population or the opening of a foreign market creates a demand 

 for 550 units at a price equivalent to two-fifths of a day's wage, what 

 rent will be paid and to whom? Now, if the demand increases to 

 600 units at a price to pay the wages of one-half day's labor, what 

 land will be utilized and what rent paid upon each grade ? Make a 

 chart to illustrate the three conditions. 



3. In case there were only two grades of land, A and B, but that 

 a second hundred days' labor on A would produce 250 units of product 

 and a third like application would yield 150 units, whereas a second 

 application of labor to B would produce 200 units and a third would 

 give 125, what land would be used and what rent would be paid under 

 each of the three price conditions ? Make a chart to illustrate. 



4. "The doctrine of rent breaks down because the doctrine of 

 marginal cost is absurd. Suppose that the marginal cost of wheat 

 to a certain farmer is 70 cents per bushel and that wheat is selling 

 for 70 cents. If the average cost to this farmer is 50 cents, he will 

 be under strong incentive to increase his output. This marginal cost 

 does not operate so powerfully as average cost in price determination, 



