Sue Ann Buchanan,can make $800,000 on the pro tennis tour,but would be willing to do it for $200,000.Her economic rent is

Question

Quizplus · Accepted Answer

Economic rent is the difference between what an individual actually earns (in this case, $200,000) and what they could earn in their next best alternative (in this case, $800,000). Therefore, Sue Ann Buchanan's economic rent is $600,000. She would still be willing to play at a lower salary, hence $200,000 is not her economic rent. Choosing to play for $200,000 means that she is giving up the opportunity to earn an extra $600,000, her economic rent.

Sue Ann Buchanan,can Make $800,000 on the Pro Tennis Tour,but