The figure given below shows the demand [D and D'] and supply [S and S'] curves of shares of stock.Figure 17.2

-An increase in economic rent is simply a transfer from the buyer to the seller without any change in quantity. Identify the underlying assumption.

Question

The figure given below shows the demand [D and D'] and supply [S and S'] curves of shares of stock.Figure 17.2
 
-An increase in economic rent is simply a transfer from the buyer to the seller without any change in quantity. Identify the underlying assumption.

Quizplus · Accepted Answer

The underlying assumption is that quantity supplied remains unchanged even when economic rent increases. This implies that sellers have a certain amount of market power and can extract some economic rent without affecting the quantity supplied.

The Figure Given Below Shows the Demand [D and D']