Question

    Short-run returns to fixed supply of factor of

    production are known as
    A Rent Correct Answer Incorrect Answer
    B Quasi Rent Correct Answer Incorrect Answer
    C Differential Rent Correct Answer Incorrect Answer
    D Sunk Rent Correct Answer Incorrect Answer

    Solution

      The concept of quasi rent was introduced in economic theory by Marshall Marshall’s concept of quasi-rent is the extension of the Ricardian concept of rent to the short run earnings of the capital equipment (such as machinery, building etc.) which are in inelastic supply in the short run.The distinguishing characteristic of land is the fact that its supply is perfectly inelastic to changes in its price and therefore its earnings depend mainly upon the demand for it. But, in the short run, the fixed capital equipment such as machinery is likewise perfectly inelastic in supply and cost of its produc­tion is not relevant once it has been produced

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