The marginal revenue product (MRP) of land declines as more land is brought into production because:
A.land is a "free and nonreproducible gift of nature."
B.of diminishing returns.
C.land rent has no incentive function.
D.the supply of land is fixed.
vadsnmv adjv
land is a "free and nonreproducible gift of nature
The correct answer is B. The marginal revenue product (MRP) of land declines as more land is brought into production because of diminishing returns.
To understand why, we need to first understand what the marginal revenue product (MRP) is. MRP represents the additional revenue a firm receives by employing one more unit of a specific input, in this case, land. As more land is brought into production, the law of diminishing returns kicks in, which means that the additional output or revenue generated per unit of input decreases.
In the case of land, there is a limited amount available, and as more land is brought into production, the most fertile and easily accessible land is utilized first. As we move to less fertile or less favorable land, the amount of additional output or revenue generated per unit of land decreases. Therefore, the marginal revenue product of land declines.
Option A, "land is a free and nonreproducible gift of nature," is not the reason why MRP of land declines as more land is brought into production. While it is true that land is a natural resource, its status as a free and nonreproducible gift of nature is not directly related to the declining MRP.
Option C, "land rent has no incentive function," is not the reason either. Land rent is the payment made by firms to use land. While the incentive for landlords to charge rent may vary, it does not directly affect the MRP of land.
Option D, "the supply of land is fixed," is also not the reason for the declining MRP. While it is true that land supply is limited, it only affects the availability of land, not necessarily the declining MRP.
Therefore, the correct answer is B, "diminishing returns," as it captures the concept that as more land is brought into production, the additional output or revenue generated per unit of land decreases.