A resource that earns only economic rent _____
A)cannot be employed in any other line of production.
B)has an upward-sloping supply curve.
C)has a downward-sloping supply curve.
D)has a marginal revenue product that is less valuable than its marginal cost.
E)has a perfectly elastic supply curve.

Question

Quizplus · Accepted Answer

A resource that earns only economic rent cannot be employed in any other line of production because it has no opportunity cost. Economic rent is the surplus payment received by a factor of production over its opportunity cost. Since the resource cannot be used elsewhere, its opportunity cost is zero, and any payment received for its use is purely economic rent.

A Resource That Earns Only Economic Rent _____