Rental value — a demand and supply analysis
Land and business property are factors of production and, like goods, factor prices are determined by the flows of demand and supply. Rent is the annual price of occupying property, and rental values are determined by the flows of occupation demand and the supply of property for let. As in the case of all factors, the demand for business property depends on its ability to produce goods and services when combined with other factors of production. The demand for a factor is a derived demand, derived from the demand for the products of the factor. Thus the occupation demand for farmland suitable for wheat cropping is derived from the demand for wheat, the occupation demand for offices is derived from the demand for commercial and other services, and the occupation demand for factories is derived from the demand for manufactured goods.
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