Figure 14.2.2
-Refer to Figure 14.2.2 above. Which of the following equals economic rent?
A) The wage rate corresponding to point A on the graph
B) Area B
C) Area C
D) The rectangle (w* × L*)

Question

Figure 14.2.2
-Refer to Figure 14.2.2 above. Which of the following equals economic rent?
A) The wage rate corresponding to point A on the graph 
B) Area B 
C) Area C 
D) The rectangle (w* × L*)

Quizplus · Accepted Answer

Economic rent is defined as the difference between the amount an owner of a resource receives and the minimum amount they would be willing to accept for that resource. In this graph, economic rent is represented by Area B, which is the difference between the wage rate at point A and the wage rate at point B, multiplied by the quantity of labor hired (L*).

Figure 14.2.2 -Refer to Figure 14.2.2 Above. Which of the Following Equals