Economic rent is a payment in excess of
A)average fixed cost.
B)average variable cost.
C)opportunity cost.
D)explicit cost, but not necessarily implicit cost.

Question

Quizplus · Accepted Answer

Economic rent is a payment in excess of opportunity cost, which is the value of the best alternative foregone. It is the payment to a factor of production (such as land, labor, or capital) that is above what the factor owner would have received in their next best alternative use. Economic rent is a surplus payment that is not required to keep the factor of production employed in its current use. Therefore, option C is correct. Average fixed cost (AFC) and average variable cost (AVC) are not related to economic rent, and option A and B are incorrect. Option D is partially correct as economic rent can be above explicit costs, but it is always higher than implicit costs.

Economic Rent Is a Payment in Excess of