Exhibit 11-1
-Condider Exibit 11-1. Each of the panels depict the supply and demand conditions in a resource market. In which of the panels will the resource earnings be entirely economic rent?

Question

Exhibit 11-1 
-Condider Exibit 11-1. Each of the panels depict the supply and demand conditions in a resource market. In which of the panels will the resource earnings be entirely economic rent?

Quizplus · Accepted Answer

Economic rent occurs when the supply of a resource is perfectly inelastic, meaning the quantity supplied does not change with price. In panel (a), the supply curve is vertical, indicating perfectly inelastic supply, so all earnings are economic rent.

Exhibit 11-1 -Condider Exibit 11-1. Each of the Panels Depict the Supply