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
A)$535 000.
B)$500 000.
C)$465 000.
D)$35 000.
E)zero.

Question

Quizplus · Accepted Answer

Economic rent is the difference between the income earned from a current occupation and the income that could have been earned from the next best alternative occupation. In this case, Smith's economic rent is $500 000 - $35 000 = $465 000, as he is earning $465 000 more than his next best alternative.

John Smith Plays Baseball for $500 000 Per Year,but If