FIGURE 13- 4 The three diagrams below each show a supply curve for oil tankers over a relatively short period of time.

-If the supply curve for a factor is perfectly inelastic,the payments to the factor are
A)an unnecessary tax on the factor.
B)wholly economic rent.
C)neither economic rent nor transfer earnings.
D)wholly transfer earnings.
E)partly economic rent and partly transfer earnings.

Question

FIGURE 13- 4 The three diagrams below each show a supply curve for oil tankers over a relatively short period of time.
 
-If the supply curve for a factor is perfectly inelastic,the payments to the factor are
A)an unnecessary tax on the factor. 
B)wholly economic rent. 
C)neither economic rent nor transfer earnings. 
D)wholly transfer earnings. 
E)partly economic rent and partly transfer earnings.

Quizplus · Accepted Answer

If the supply curve for a factor is perfectly inelastic, it means that the quantity supplied by the factor remains the same regardless of changes in the price. This indicates that the factor has a unique skillset or location that cannot be easily replicated by other factors. Therefore, any payment made to the factor would be considered economic rent, as the payments are not necessary to incentivize the factor to supply the good/service.

FIGURE 13- 4 the Three Diagrams Below Each Show a Supply