FIGURE 13- 4 The three diagrams below each show a supply curve for oil tankers over a relatively short period of time.

-John Smith plays baseball for $500 000 per year,but if he were not a baseball player,his next best alternative would be to earn $35 000 per year as a sales representative.By playing baseball,Smith is earning economic rent of

Question

FIGURE 13- 4 The three diagrams below each show a supply curve for oil tankers over a relatively short period of time.
 
-John Smith plays baseball for $500 000 per year,but if he were not a baseball player,his next best alternative would be to earn $35 000 per year as a sales representative.By playing baseball,Smith is earning economic rent of

Quizplus · Accepted Answer

Economic rent is the difference between what a resource earns in its best alternative use and what it earns in its current use. In this case, Smith is earning $500,000 as a baseball player, but his next best alternative is to earn $35,000 as a sales representative. Therefore, his economic rent is $465,000 ($500,000 - $35,000).

FIGURE 13- 4 the Three Diagrams Below Each Show a Supply