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

Question

Quizplus · Accepted Answer

When the supply curve for a factor is perfectly elastic, the factor's payments are wholly transfer earnings, as the factor can be supplied at a constant price without any economic rent.

If the Supply Curve for a Factor Is Perfectly Elastic