ECONOMIC RENT Meaning and
Definition
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Economic rent refers to the excess income or profit earned by individuals, businesses, or other resource owners over and above what is necessary to keep them in their current occupation or use of their resources. It is essentially a surplus that occurs when a resource's return exceeds the minimum amount required to induce its supply.
This term is commonly used in the field of economics to describe the price or income paid for the use of a resource that is higher than its production cost. Economic rent can be seen as a form of unearned income because it often arises due to factors beyond the control or effort of the recipient.
Economic rent can arise from various sources, such as natural resources, favorable locations, or limited supply of specific skills or talents. For example, the price of a prime real estate location may significantly exceed the cost of producing similar properties in less desirable areas. The excess income generated from renting or owning such a location represents economic rent.
Overall, economic rent can be seen as a measure of the value or scarcity of a resource that goes beyond its actual production cost. It can have significant implications for income distribution, market efficiency, and resource allocation in both microeconomics and macroeconomics.
Common Misspellings for ECONOMIC RENT
- wconomic rent
- sconomic rent
- dconomic rent
- rconomic rent
- 4conomic rent
- 3conomic rent
- exonomic rent
- evonomic rent
- efonomic rent
- edonomic rent
- ecinomic rent
- ecknomic rent
- eclnomic rent
- ecpnomic rent
- ec0nomic rent
- ec9nomic rent
- ecobomic rent
- ecomomic rent
- ecojomic rent
Etymology of ECONOMIC RENT
The term "economic rent" has its roots in classical economics and is derived from the concept of rent in the context of land. The word "rent" originally comes from the Latin word "rendere", which means "to give back". In feudal societies, landowners would grant the use of their lands to others in exchange for payment, which was referred to as rent.
However, the concept of economic rent as used in economics today was coined by Scottish economist David Ricardo in the early 19th century. Ricardo defined economic rent as the difference between the payment for a factor of production (e.g., land, labor, or capital) and the minimum amount necessary to bring that factor into production. In the case of land, economic rent refers to the surplus value derived from its natural fertility or location, rather than any efforts made by the landowner.
Similar spelling words for ECONOMIC RENT
- economic crisis,
- economic system,
- economic growth,
- economic science,
- economizer,
- economic value,
- economic process,
- economic geology,
- economic expert,
- economic theory,
- economically,
- economic policy,
- economiser,
- economic aid,
- economical,
- econometrist,
- econometric.
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