A TV actor used to be a teacher.Aside from the salary, he likes both jobs equally well.If he can earn $50, 000 as a teacher and $300, 000 as an actor, what are his economic rent and opportunity costs as an actor?
A)Economic rent is $250, 000; opportunity costs are $50, 000.
B)Economic rent is $50, 000; opportunity costs are $250, 000.
C)Economic rent is $50, 000; opportunity costs are $300, 000.
D)Economic rent is $300, 000; opportunity costs are $50, 000.
E)Economic rent is $300, 000; opportunity costs are $350, 000.

Question

Quizplus · Accepted Answer

Economic rent is the extra income earned over the next best alternative, which is $300,000 - $50,000 = $250,000. Opportunity cost is the income foregone from the next best alternative, which is $50,000.

A TV Actor Used to Be a Teacher