There are two primary sources of profit (or "economic rent"):
A)Market power and superior resources.
B)Market power and competitive advantage.
C)Competitive advantage and disequilibrium rents.
D)Cost advantage and differentiation advantage.

Question

Quizplus · Accepted Answer

Market power allows a company to charge higher prices and earn economic rent, while superior resources such as rare knowledge or access to unique raw materials can also provide a source of economic rent. Option B is incorrect because market power and competitive advantage are essentially the same thing - competitive advantage allows a company to have market power. Option C is incorrect because disequilibrium rents are a temporary phenomenon and not a sustainable source of profit. Option D is incorrect because while cost advantage and differentiation advantage can provide a competitive advantage, they do not necessarily result in economic rent.

There Are Two Primary Sources of Profit (Or "Economic Rent")