Principles of Economics (Second Edition)
2nd Edition
ISBN: 9780393614077
Author: coppock, Lee; Mateer, Dirk
Publisher: W. W. Norton & Company
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Chapter 14, Problem 8QFR
To determine
To explain:
The difference between economic rent and rent seeking.
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How does the economist’s use of the term “rent” differ from everyday usage? Explain: “Though rent need not be paid by society to make land available, rental payments are useful in guiding land into the most productive uses.”
Economists Conclude that a tax on the revenues of firms will be shifted in part to consumers of the products of those firms in the form of higher prices. However, they believe that a tax on the rent of land usually cannot be shifted and must be paid entirely by the landlord. What explains the difference?
Discuss Ricardo’ theory of rent
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Principles of Economics (Second Edition)
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- Grace owns a house. She can rent her house for two years to one tenant for a profit of $24,000 a year, or she can rent it to two tenants each year for a profit of $10,000 per tenant per year. Calculate the economic rent over the course of two years of renting to one tenant.arrow_forwardNick's salary is pure economic rent. What does this statement imply about Nick's next best alternative salary?arrow_forwardBriefly explain whether landlord play a key role in keeping the price of properties and land higharrow_forward
- Define “economic rent” and identify the market structure that generates the highest economic rent.arrow_forwardAre the statements below true or false? Briefly explain why you have chosen your answer f)Under a “Pure Wage Contract" in agriculture, the wage is simply equal to the fixed rent of the contract.arrow_forwardDavid Ricardo has developed The Theory of Rent due of issues of Corn Laws, simple briefly the impact of rent land based on: A. Extensive margin of cultivationarrow_forward
- How do you legally reduce labor surplus? Give an example for each.arrow_forwardtime period-known as the Dust Bowl-major dust storms caused residents of Kansas to migrate west to such states as California and Washington. It also made the land in Kansas much less useful for producing wheat. Using the example of the Dust Bowl, show the effects of these two changes on the market for labor in Kansas on the following graph. WAGE Market for Labor LABOR Supply Demand 10 Demand D Supply ? From the graph, you can deduce that the migration of workers leads the equilibrium quantity of labor in Kansas to Now consider the effect this change in the labor market has on the land market. In particular, think about the effec land and the exodus of farm workers on the value of land in Kansas. decrease increase ninished productivitarrow_forwardWhat is the difference between factor cost and market price? According to macro economics?arrow_forward
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