Asked by Courtney Jennell on Jun 22, 2024
Verified
The return to any factor of production that is in fixed supply is
A) pure profit.
B) pure rent.
C) producer surplus.
D) factor surplus.
Pure Rent
Income received by a landowner for the use of a natural resource, land, or location that is essentially in fixed supply.
- Gain an understanding of pure rent and its connection to immutable supply factors of production.
Verified Answer
JV
Jonathan ValdovinosJun 25, 2024
Final Answer :
B
Explanation :
The return to any factor of production that is in fixed supply is considered "pure rent." This is because the supply of the factor cannot increase in response to increased demand, leading to payments that are essentially for the use of the fixed supply, rather than for the cost of production or investment.
Learning Objectives
- Gain an understanding of pure rent and its connection to immutable supply factors of production.