When a rent-seeking equilibrium is reached,the
A) economic profit is maximized.
B) economic profit is eliminated by legislation.
C) economic profit is eliminated.
D) consumer surplus is greater than without rent seeking.
E) consumer surplus is eliminated.

Question

Quizplus · Accepted Answer

Rent-seeking results in resources being diverted away from productive and efficient uses, leading to lower economic output and efficiency. When a rent-seeking equilibrium is reached, economic profit is eliminated as the competition is no longer based on the quality or cost of the good/service provided but on the ability to secure rents. This can result in reduced consumer surplus, but it is not necessarily eliminated. Therefore, option C is the best choice.

When a Rent-Seeking Equilibrium Is Reached,the