Read the following statements about quasi-rent : (a) The concept of quasi-rent was introduced in…
Only statements (b) and (c) are correct. Quasi-rent is the short-run return to capital whose supply cannot readily adjust, and entry or expansion erodes this temporary…
Choose your answer
Read the following statements about quasi-rent :
(a) The concept of quasi-rent was introduced in economics by Samuelson.
(b) The quasi-rent is the short-run earnings of the capital which are in inelastic supply in the short-run.
(c) The quasi-rent disappears in the long-run due to the increase in the supply of capital.
(d) Quasi-rent = Total revenue – Total fixed cost
Answer and explanation
Correct answer B
Only statements (b) and (c) are correct. Quasi-rent is the short-run return to capital whose supply cannot readily adjust, and entry or expansion erodes this temporary return in the long run. The concept is associated with Alfred Marshall, and quasi-rent equals total revenue minus total variable cost.
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Rajasthan SET (RSET)