How will an increase in the birthrate affect the equilibrium price of land?
Macroeconomics
An increase in the birth rate results in an increase in the equilibrium price of land. There
are various reasons to explain this and the reasons are as discussed.
An increase in the birthrate results into a population increase which means that there will
be an increase in the number of potential buyers will increase the population of potential buyers
of land and hence shift the demand curve for land to the right which means that there is an
increase in the demand of land hence resulting in an increase in the equilibrium price of land
(Marshall, 2013, pg 5.).
The high population resulting from the increased birth rate also means that the will be a
high population density on available lands and this high population density will result to people
demanding for more land so as to meet their needs hence resulting in a high demand of more
land (Kishtainy, 2012, Pg. 85).
This means that the demand curve will shift to the right which is a clear indication that
there will be an increase in the equilibrium price of land.
Introduction to macroeconomics 2
Lastly, the high population resulting from the increased birth rate will result in the
increase in demands of products and services related to land and its maintenance. Such services
include land rates and taxes and the increase most probably occurs so as to collect more revenue
to cater for the increased population. An example of such a product includes fertilizers whose
price will increase because of the high demand. The increase of the maintenance cost means that
the equilibrium price of the land increase and this is because the maintenance cost is directly
related to the equilibrium price of the land.
Reference
Kishtainy, N. (2012). The Economics Book. London: Dorling Kindersley.
