Question

Which of the following statements about economic rents is correct?

Question 25 options:

	Family businesses are the type of productive organization that can reap the most benefits from the economic rents earned from their new innovations.
	Markets provide a competitive environment where those unable to copy others? innovations would fail. This provides the ?stick? that drives the innovation process.
	You and your employees have worked overtime this month to produce a record monthly profit. This is the economic rent achieved by your firm.
	Economic rents provide strong incentives for innovation even in a centrally planned economy.

Answer 1

The correct option is C) You and your employees have worked overtime this month to produce a record monthly profit. This is the economic rent achieved by your firm.

Economic rent is the extra money or payment made over and above the amount expected by its owner. It is the positive difference between the actual payment received for the work you have done or the money a piece of land or machinery has made for you and the payment amount that was expected in the first place. Economic rent should not be mistaken for the more commonly used 'rent' term, which simply refers to payments made for using an asset or property. Economic rent can be thought of as more of a surplus amount.