The supply of factor X is perfectly inelastic and it receives a price of $100. It follows that

Question

Quizplus · Accepted Answer

When the supply of a factor (like factor X) is perfectly inelastic, it means that the quantity supplied does not change regardless of the price. Therefore, the entire payment to this factor is considered economic rent, because the factor would be supplied at any price above zero. Economic rent is the payment to a factor of production in excess of its opportunity cost, and in the case of a perfectly inelastic supply, the opportunity cost is essentially zero since the factor would be supplied regardless of the price.

The Supply of Factor X Is Perfectly Inelastic and It