Scenario 14.1
A worker in Firm A earns an income of $5,000 per month. He has been offered a job in Firm B where he will be paid a salary of $7,000 per month.
-Refer to Scenario 14.1. If the worker joins Firm B, his economic rent is:
A)$5,000.
B)$7,000.
C)less than $7,000 but more than $2,000.
D)$2,000.
E)less than $2,000.

Question

Quizplus · Accepted Answer

Economic rent is the extra amount the worker earns over what he would be willing to work for. In this case, it's the difference between the new salary ($7,000) and the old salary ($5,000), which is $2,000.

Scenario 14.1 A Worker in Firm a Earns an Income of $5,000