Between 1988 and 1989, the price of retail space in Ginza, Tokyo's premier commercial and entertainment center, rose from $400 to $625 per square foot.This was the result of an increase in demand in the face of a perfectly inelastic supply curve for retail space.Economists call this
A)monopoly profit.
B)economic rent.
C)usury.
D)marginal revenue product.

Question

Quizplus · Accepted Answer

Economic rent is a term used in economics to refer to the difference between the price that is paid for using a particular resource and its actual opportunity cost. In this case, the increase in demand for retail space in Ginza led to an increase in its price, even though the supply curve for retail space is perfectly inelastic. This increase in price represents economic rent, which is the extra return earned by the owners of the resource because of its scarcity or uniqueness.

Between 1988 and 1989, the Price of Retail Space in Ginza