The figure given below represents an imperfectly competitive resource market. Here common land (and not land used for specific purpose) is under consideration.Figure 18.1

-The supply of land being fixed, the earnings from land are called transfer earnings.

Question

The figure given below represents an imperfectly competitive resource market. Here common land (and not land used for specific purpose) is under consideration.Figure 18.1
 
-The supply of land being fixed, the earnings from land are called transfer earnings.

Quizplus · Accepted Answer

The earnings from land, given its fixed supply, are called economic rent, not transfer earnings. Transfer earnings refer to the minimum payment required to keep a factor of production in its current use, whereas economic rent is the payment to a factor of production (like land) over and above what is necessary to keep it in its current use, arising due to its fixed supply.

The Figure Given Below Represents an Imperfectly Competitive Resource Market