Scenario 14.1 A worker in Firm A earns an income of $5,000 per month.He has been offered a job in Firm B where he will be paid a salary of $7,000 per month.
-Refer to Scenario 14.1.If the worker joins Firm B,his economic rent is:
A)$5,000.
B)$7,000.
C)less than $7,000 but more than $2,000.
D)$2,000.
E)less than $2,000.

Question

Quizplus · Accepted Answer

Economic rent is the difference between what a worker is paid and the minimum they would accept. Here, the worker's economic rent is $2,000, which is the difference between the $7,000 salary at Firm B and the $5,000 salary at Firm A.