When does the entire earning of a resource comprise of economic rent?

Question

Quizplus · Accepted Answer

When the supply curve of a resource is perfectly or relatively inelastic, meaning that the quantity supplied cannot be easily increased or decreased, the entire earning of the resource will be economic rent. This is because the market demand for the resource sets the price, and suppliers cannot increase their output to meet the demand, allowing them to charge a premium for their limited supply. A vertical supply curve represents perfect inelasticity, indicating that any increase in demand will not result in an increase in supply. Therefore, choice C is correct.

When Does the Entire Earning of a Resource Comprise of Economic