JAMB - Economics (2017 - No. 2)

Land is defined in economics as a free gift of nature. Land does not only include the land surface of the earth but all other free gifts of nature or natural resources like forests, mineral resources, rivers, oceans, atmosphere, etc. unlike other factors of production, the supply of land is limited. In other words, land is a fixed factor of production, it is inelastic.

An inelastic product is defined as one where a change in price does not significantly impact demand for that product. This is because landowners can't shift land to a different market or reduce production. If the land is not on the market for development, it has no value. This means that in order for a good to be elastic, the production or use must change.