Long-run economic rent or profit do not exist for fixed factors like land because
A)bidding drives up the price of the factor until no economic rent exists.
B)there is no market for such factors.
C)these factors have L-shaped isoquants.
D)these factors will earn economic profits.

Question

Quizplus · Accepted Answer

In a competitive market, the price of a factor of production like land will be bid up until it reaches its economic rent, which is the maximum amount that can be paid while still earning a normal profit. In the long-run, this economic rent will disappear as more land becomes available or as new technologies are developed that make it possible to produce more with less land. Therefore, long-run economic rent does not exist for fixed factors like land.

Long-Run Economic Rent or Profit Do Not Exist for Fixed