If the supply curve for a factor is perfectly inelastic,the payments to the factor are
A)wholly economic rent.
B)wholly transfer earnings.
C)partly economic rent and partly transfer earnings.
D)neither economic rent nor transfer earnings.
E)an unnecessary tax on the factor.

Question

Quizplus · Accepted Answer

If the supply curve for a factor is perfectly inelastic, it means that no matter what the price of the factor is, the quantity supplied remains constant. Therefore, the factor is considered to be a fixed resource, and any payments made to it are purely economic rent, meaning that the factor earns additional income without any additional cost or effort on its part.

If the Supply Curve for a Factor Is Perfectly Inelastic,the