Let us suppose that if Oprah Winfrey was not a superstar she would have been a judge making $100,000 per year. If she makes $63 million dollars this year, her economic rent is

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Quizplus · Accepted Answer

Economic rent is the income earned by a factor of production above its opportunity cost. In this case, Oprah's opportunity cost is what she would have earned as a judge, which is $100,000 per year. Therefore, her annual economic rent is $63 million - ($100,000 per year x number of years she has been making money as a superstar). As we are given no information about the number of years Oprah has been earning $63 million, the best option is to subtract the annual opportunity cost from her yearly earnings to get her economic rent for the given year, which is $62.9 million.

Let Us Suppose That If Oprah Winfrey Was Not a Superstar