The term "economic rent" is used to describe:

Question

Quizplus · Accepted Answer

All of these statements are true. Economic rent refers to the surplus that is earned by owners of a factor of production, i.e. labor, capital or land, over and above what is required to bring that factor into production. This surplus is equivalent to producer surplus that firms earn in output markets. In a competitive market, firms will bid up the price of a factor of production to the level where its marginal revenue product equals its price. Economic rent is the difference between this market price and what is necessary to bring the factor into production. Therefore, economic rent reflects the value that is captured by owners of factors of production due to their limited supply or unique characteristics.

The Term "Economic Rent" Is Used to Describe