Question

Suppose that there are two possible uses for land: agriculture and forestry. How should land be...

Suppose that there are two possible uses for land: agriculture and forestry. How should land be allocated across these two uses?

  • All answers are correct.
  • Until the present value of benefits to society from forestry are zero.
  • Until the present value of benefits to society from agriculture are zero.
  • Until the present value of benefits to society from agriculture and forestry are equal.
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Answer #1

There are two possible uses for land, i.e., agriculture and forestry.

The land should be allocated to a particular purpose (i.e., for agriculture or forestry) untill the net present benefits are equal to zero.

Hence, the land will be use only for forestry Until the present value of benefits to society from forestry are zero.

The land will be use only for agriculture Until the present value of benefits to society from agriculture are zero

The land will allocated between the forestry and agriculture Until the present value of benefits to society from agriculture and forestry are equal.

Answer: Option (A) i.e., all answers are correct

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