Steph Curry loves playing basketball so much that he would be willing accept a salary that simply keeps him housed and fed.But because his skills are so rare, professional basketball teams will compete to pay him tens of millions of dollars to play for them.These tens of millions of dollars are
A)pure profit.
B)economic rent.
C)marginal rent.
D)competitive rent.

Question

Quizplus · Accepted Answer

The tens of millions of dollars that professional basketball teams are willing to pay Steph Curry are an example of economic rent. Economic rent refers to the payment made for a factor of production (in this case, Steph Curry's rare basketball skills) that is in fixed supply and in high demand. The payment is above and beyond what would be needed to keep the factor of production (Steph Curry) in its current use. In other words, the payment is not necessary to incentivize Steph Curry to play basketball (since he loves it so much), but rather reflects the scarcity and high demand for his skills.

Steph Curry Loves Playing Basketball So Much That He Would