Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
20th Edition
ISBN: 9780078021756
Author: McConnell, Campbell R.; Brue, Stanley L.; Flynn Dr., Sean Masaki
Publisher: McGraw-Hill Education
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Question
Chapter 16, Problem 1DQ
To determine
Difference between economical rent and ordinary rent.
Expert Solution & Answer
Explanation of Solution
In everyday life, the term rent is used to explain the payment that is made for the legal borrowing of some goods and services. For example – One pays rent for the use of a flat or apartment; one can also pay the equipment rental company for borrowing equipments. This rent is a part of capital cost of the commodity, added to the maintenance and share of taxes. On the other hand, according to an economist, economic rent is the payment made for the use of land and other natural resources which has fixed supply. For example – Rent on land. No matter how high or low the rent, the same amount of land will be available.
Now, explaining the given statement in the quotation, the land has alternative uses. To use the land in the most way, individuals and firms must compete with each other, and the winners are those who pays the highest rent. This bidding makes sense if the winner expects to make use of the land in the most productive manner than the losers.
Economics Concept Introduction
Concept introduction:
Rent in everyday life: In everyday life, the term rent is used to explain the payment that is made for the legal borrowing of some goods and services. For example – one pays rent for the use of a flat or apartment; one can also pay the equipment rental company for borrowing equipments. This rent is a part of capital cost of the commodity, added to the maintenance and share of taxes.
Rent in terms of economics: According to an economist, economic rent is the payment made for the use of land and other natural resources which has fixed supply. For example – Rent on land. No matter how high or low the rent, the same amount of land will be available.
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Students have asked these similar questions
Tasks
Exercise 1
Assess the following functions:
1. f(x)= x2+6x+2
2.f '(x)=10x-2x2+5
a. Find the stationary points. (5 marks)
b. Determine whether the stationary point is a maximum or minimum. (5 marks)
c. Draw the corresponding curves (5 marks)
Problem 2:
The sales data over the last 10 years for the Acme Hardware Store are as follows:
2003
$230,000
2008
$526,000
2004
276,000
2009
605,000
2005
328,000
2010
690,000
2006
388,000
2011
779,000
2007
453,000
2012
873,000
1. Calculate the compound growth rate for the period of 2003 to 2012.
2. Based on your answer to part a, forecast sales for both 2013 and 2014.
3. Now calculate the compound growth rate for the period of 2007 to 2012.
1. Based on your answer to part e, forecast sales for both 2013 and 2014.
5. What is the major reason for the differences in your answers to parts b and d? If you were to
make your own projections, what would you forecast? (Drawing a graph is very helpful.)
Exercise 4A firm has the following average cost: AC = 200 + 2Q – 36
Q
Find the stationary point and determine if it is a maximum or a minimum.b. Find the marginal cost function.
Chapter 16 Solutions
Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
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