Exhibit 11-3 In Exhibit 11-3, which unit of the resource is earning the most economic rent?
A)the first
B)the tenth
C)the fifteenth
D)the hundredth
E)they are all earning the same economic rent

Question

Exhibit 11-3  In Exhibit 11-3, which unit of the resource is earning the most economic rent?
A)the first 
B)the tenth 
C)the fifteenth 
D)the hundredth 
E)they are all earning the same economic rent

Quizplus · Accepted Answer

Economic rent is the difference between the earnings of a resource and its opportunity cost. Here, the resource units are ranked in order of productivity, with the first unit being the most productive. The unit earning the most economic rent will be the one where the difference between its earnings and the opportunity cost is the highest. As we move down the list, the opportunity cost increases and hence the economic rent decreases. Hence, the first unit is earning the most economic rent.

Exhibit 11-3 in Exhibit 11-3, Which Unit of the Resource