What Is Contract Rent in Economics
Rent is money paid for the use of a property or other home. An example of rent is what you pay your landlord to live in your apartment. An example of rent is when you pay to live in an apartment owned by someone else. Of course, you have to pay, but this payment is more for the transfer of ownership to the land or for the victim of current uses. This is because the land is freely available in the scarce resource limited or freely available. So you seem to be paying for land; But essentially, the payment is only for its scarcity, not for naturally offered land. Scarcity rent refers to the price paid for the use of homogeneous land when its supply is limited in relation to demand. If all the land is homogeneous, but the demand for land exceeds its supply, the whole country will earn an economic lease because of its scarcity. In this way, rent is created when the supply of land is inelastic. Professor Ricardo said that land is beneficial, but also rare.
The productivity of the earth was indicative of the generosity of nature, but its overall offer, which remained more or less fixed, symbolized the niggardity of nature. Economic rents can also occur when some producers in a competitive market have technologically advanced asymmetric or production information systems that give them a competitive advantage as low-cost producers that other firms cannot or cannot acquire. If a wheat producer has access in some way to a free and unlimited supply of water while his competitors do not, he would be able to earn an economic rent by selling his product at the prevailing market price. As a result, economic rents are considered undeserved. Thus, rent refers only to payments for factors of production that are in an imperfectly elastic supply. For example, it is the price paid for land use. (1) Economic pension. This is the payment for land use. However, a political restriction on the number of people entering the competitive market for guild services will increase the return on investment in guild education, especially for those who are already practicing, by creating an artificial shortage of guild members. To the extent that a restriction for guild participants actually increases the return on investment for guild members rather than ensuring skill, the practice of restricting participants to the domain is a pension-oriented activity, and the excess return realized by guild members is an economic rent. It is the use of the term by classical economists that they argue that it is the country that can earn rent. It is available for free without human effort, but in fixed quantities.
No other factor can earn rent because their supplies are not fixed like those of the land. This is the concept of the loan pension: the land alone brings in rent. In the ordinary sense, the term rent is used in a broad sense. Rent is the price of services or the use of the property. E.B. Rent a house, machine, car, etc. But in economics, it refers to the price paid for the use/services of the land and other free gifts of nature. It is also called an economic surplus because it occurs without effort on the part of the owner. This is the total amount of the rental that the tenant is willing to pay to the property according to his agreement. It includes the owner`s minimum opportunity cost as well as all other payments such as taxes, insurance, maintenance, utilities and other service fees that are otherwise paid by all owners. The tenant pays the amount specified in the written agreement.
It is also called gross rent. Of course, there are certain types of improvements such as drains, hedges, wells, irrigation and others in the country. And they increase the country`s productivity. These improvements are man-made and represent capital investment. If we deduct the return on these improvement costs in the form of investments from the total price, we get the pure ground rent. That is, the lease is the total income of the land without the cost of improvement to increase the productivity of the land. For classical philologists, rent is a superfluous, superfluous and non-functional payment, because rent is not a necessary payment to create land or make it available in society. This concept of quasi-leasing is the extended form of the classic concept of land lease to the income of fixed factors (such as machinery, buildings, etc.) in the short term.
It was Marshall who invented this point of view. Like the country, changing the prices of machinery, buildings or others does not change their supply. Simply put, the economic pension is a surplus where there are no business or production costs. From the table, the country of the first class, which is the most fertile, produces 40 kg, the second class produces 30 kg, the country of the third class produces 20 kg, and the country of the fourth class is less fertile, only 10 kg .. .