If a factor of production has no production cost and has a fixed supply, then payments to that factor constitute what economists call
A) abnormal profits.
B) economic rent.
C) normal profits.
D) interest payments.

Question

Quizplus · Accepted Answer

In economics, a factor of production that has no production cost and a fixed supply is referred to as a "land resource." Payments made for the use of land resources are called economic rent. This is because the supply of land is fixed, and its value is determined by the demand for it. Therefore, landowners can receive payments above and beyond what would be needed to keep the land in production, as there is no additional cost associated with producing more of it.

If a Factor of Production Has No Production Cost and Has