10 terms

Economic Rent

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The division of earnings between opportunity cost and economic rent depends on the resource owner's ______.
Elasticity of supply
In general, the less elastic the resource supply, the greater the economic rent as a proportion of _____.
Total earnings
The resource supply curve is vertical, indicating that the resource has no alternative use (can do nothing else). The price is demand-derived, and all earnings are ______.
Economic Rent
The resource supply curve is horizontal, indicating that the resource can also earn that much in its best alternative used. Employment is demand-determined, and all earnings are ______.
Opportunity Cost
Definition of Economic Rent:
Portion of resource's total earnings that exceeds its opportunity cost.
The ____ the resource supply, the greater the economic rent as a proportion of total earnings.
Less elastic
Economic Rent, is what the resource earns ____ its opportunity cost.
Above
Economic Rent to a resource holder is like ____ to the ____.
-Economic profit
-Firm
When all earnings reflect opportunity cost the supply curve is horizontal, which represents _____.
Perfectly elastic
When all earnings reflect economic rent the supply curve is vertical, which represents _____.
Perfectly inelastic
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