Consider the mobility of any factor of production.The more broadly we define the use of the factor,the is the mobility of the factor and the is the share of the factor payment that is economic rent.
Suppose Harrison Ford makes 2 movies per year and earns $10 million per movie.Suppose that if he werenʹt making movies his next best alternative would be to earn $500 000 per year endorsing shampoo.By making movies,Harrison Ford
A)is earning economic rent of $20 500 000 per year.
B)is earning economic rent of $20 000 000 per year.
C)is earning economic rent of $19 500 000 per year.
D)is earning economic rent of $500 000 per year.
E)is not earning economic rent.
Kobe Bryant is a highly paid professional basketball player in the National Basketball Association.From the perspective of the whole NBA,Kobe Bryantʹs economic rent would be ,while from the perspective of his individual team it would be .
A)very small; very large
B)zero; impossible to calculate
C)close to his whole salary; very small
D)zero; close to his whole salary
E)very large; close to his whole salary
Refer to Figure 13-2.This factor market is in equilibrium at point B.Which of the following statements best describes factor payments at point B?
A)total income paid to the factor is $8
B)total of economic rent plus transfer earnings is $320
C)total factor earnings are $320 and the 40th unit earns zero rent
D)total factor earnings are $320 and the 40th unit earns economic rent of $8
E)economic rent to the 40th unit is $320