Exhibit 29-1

-Refer to Exhibit 29-1. Suppose the supply curve is S₁ and the price is A. Pure economic rent equals area

Question

Exhibit 29-1 -Refer to Exhibit 29-1. Suppose the supply curve is S₁ and the price is A. Pure economic rent equals area

Quizplus · Accepted Answer

Pure economic rent is the payment to a factor of production in excess of the minimum required to bring it into use. Since the supply curve is perfectly inelastic (vertical), indicating that the quantity supplied does not change with price, the entire payment to the factor at price A is not in excess of what is necessary to bring it into use. Therefore, there is no area under the supply curve that represents pure economic rent, making all the provided options incorrect.

Exhibit 29-1 ​

Exhibit 29-1