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The portion of income comprised of economic rent depends upon the elasticity of supply for the factor.
- The less elastic the supply for a factor, the greater the share of income that is comprised by economic rent. When the supply is perfectly inelastic, all of the income is economic rent.
- The more elastic the supply for a factor, the smaller the share of income that is economic rent. When the supply is perfectly elastic, none of the income is economic rent.
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Subject 1. Types of Profit Measures
urce for use, which is the value of the factor in its next best use. The following figure illustrates the division of a factor income into economic rent and opportunity cost. <span>The portion of income comprised of economic rent depends upon the elasticity of supply for the factor. The less elastic the supply for a factor, the greater the share of income that is comprised by economic rent. When the supply is perfectly inelastic, all of the income is economic rent. The more elastic the supply for a factor, the smaller the share of income that is economic rent. When the supply is perfectly elastic, none of the income is economic rent. <span><body><html>
Subject 1. Types of Profit Measures
urce for use, which is the value of the factor in its next best use. The following figure illustrates the division of a factor income into economic rent and opportunity cost. <span>The portion of income comprised of economic rent depends upon the elasticity of supply for the factor. The less elastic the supply for a factor, the greater the share of income that is comprised by economic rent. When the supply is perfectly inelastic, all of the income is economic rent. The more elastic the supply for a factor, the smaller the share of income that is economic rent. When the supply is perfectly elastic, none of the income is economic rent. <span><body><html>
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