The Hawaiian island of Lana'i is privately owned by Castle & Cooke and for generations most of its land was used to grow pineapples. Now, many of the pineapple fields have been replaced by tourist accommodations, including a pair of world-class hotels and a top rated golf course. What would an economist say about this change in land-use patterns?
A) While growing pineapples used the island's land more efficiently, tourism provides utility to the largest number of people.
B) Economic rent has allocated the island's resources to their highest-valued use: tourism.
C) Agriculture is still the land's highest-valued and most efficient use, but tourism earns more profits for Castle & Cooke.
D) To find the land's economic rent, add the price per acre that land on Lana'i would be worth if used to grow pineapples to the value per acre when used for a golf course.
Answer: B) Economic rent has allocated the island's resources to their highest valued use: tourism.
You might also like to view...
Use the following table to answer the question below.Quantity DemandedPriceQuantity Supplied5$7966875784693510241113If demand decreased by 4 units at each price, what would the new equilibrium price and quantity be?
A. $6 and 8 units B. $5 and 7 units C. $3 and 5 units D. $4 and 6 units
Refer to the figure above. If the pre-tax equilibrium price of Good X was $3 and the price that consumers need to pay after the imposition of a per-unit tax of $3 is $5, the tax incidence on consumers is approximately ________
A) 50% B) 2% C) 3% D) 67%
If the price of milk rises, when is the price elasticity of demand likely to be the lowest?
a. immediately after the price increase b. one month after the price increase c. three months after the price increase d. one year after the price increase
The production possibilities curve:
A. shows all of those levels of production that are consistent with a stable price level. B. indicates that any combination of goods lying outside the curve is economically inefficient. C. is a frontier between all combinations of two goods that can be produced and those combinations that cannot be produced. D. shows all of those combinations of two goods that are most preferred by society.