Suppose the most productive use of a particular site is as a manufacturing plant that will generate revenues of $12,000,000 per year with raw material costs and operating expenses (other than net rent) of $7,000,000 per year, and construction costs (for the plant and equipment) that can be paid for with a perpetual loan with interest of $3,000,000 per year. according to the residual theory, how much is this site worth in terms of annual land rent?

$2,000,000

Explanation:

The computation of the site worth is shown below:

= Revenues generated - operating expenses - interest on perpetual loan

= $12,000,000 - $7,000,000 - $3,000,000

= $2,000,000

Based on residual theory we deducted the operating expenses and the interest perpetual loan from the revenues generated so that the accurate value can come.

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know