Economic rents are useful because

Question

Quizplus · Accepted Answer

Economic rents are excess returns earned by a factor of production, beyond what is required to keep it in its present use. They are useful as they incentivize resources to move from less efficient uses to more efficient uses, resulting in a more productive economy. This is because the owners of resources earning economic rents have an incentive to sell them to the highest bidder, which would be the user who values them the most. Therefore, resources will move towards the most valuable uses, increasing the overall efficiency of the economy.

Economic Rents Are Useful Because