If all returns to a resource are in the form of economic rent,_____
A)the price of that resource is determined exclusively by supply.
B)the price of that resource is determined exclusively by demand.
C)the equilibrium quantity of that resource is zero.
D)the equilibrium price of that resource is determined by government.
E)the equilibrium price of that resource is zero.

Question

Quizplus · Accepted Answer

Economic rent is the payment to an owner or factor of production in excess of the costs needed to bring that factor into production. In a situation where all returns to a resource are in the form of economic rent, it implies that the resource's supply is perfectly inelastic (fixed) and thus, the price of that resource is determined exclusively by the demand for it.

If All Returns to a Resource Are in the Form