Suppose your economics professor earns an equal annual salary of $40,000.The professor loves teaching and would not quit her job if her pay were reduced to $15,000 per year.Your professor is earning annual economic rent of

Question

Quizplus · Accepted Answer

Economic rent is the difference between what someone is paid and what they would need to be paid to stay in the same job. In this case, the professor is currently earning $40,000 but would be willing to stay in the job for $15,000. Thus, the economic rent is $25,000.

Suppose Your Economics Professor Earns an Equal Annual Salary of $40,000.The