Suppose a farmer in a perfectly competitive agricultural industry rents land that is uniquely productive in the production of a certain crop.In the long run,
A) the owner of the land receives economic rent while the farmer earns zero economic profit.
B) the owner of the land earns zero economic profit while the farmer receives economic rent.
C) both the farmer and the owner of the land receive economic rent.
D) neither the farmer nor the owner of the land receive economic rent.

Question

Quizplus · Accepted Answer

In a perfectly competitive agricultural industry, in the long run, economic rent goes to the owner of uniquely productive land. The farmer, on the other hand, earns zero economic profit as any additional revenue from selling the crop is cancelled out by the higher rental payments they have to make for the use of the productive land. Therefore, option A is the correct choice.

Suppose a Farmer in a Perfectly Competitive Agricultural Industry Rents