Which of the following statements is true?
A)The motivation for rent seeking is not the same as the motivation for profit seeking.
B)Economic rent is a payment in excess of opportunity cost.
C)The deadweight loss triangle is not considered the graphic representation of one of the costs of monopoly; instead, it is one of the costs of not having a monopoly.
D)Rent seeking is almost always an irrational activity as far as the rent seekers are concerned.

Question

Quizplus · Accepted Answer

Economic rent is defined as a payment in excess of opportunity cost, which means that it is a payment for a factor of production (such as land or labor) that is in limited supply and therefore earns a higher return than the amount that would be necessary to keep it in its current use or attract it to an alternative use. Rent seeking, on the other hand, refers to the use of resources or efforts to obtain economic rents or other advantages through the political or legal process, rather than through productive activity in the market. The motivation for rent seeking may be different from the motivation for profit seeking, as rent seekers may seek to maintain or enhance their existing position or monopolize a market, rather than create new value. The deadweight loss triangle is a graphic representation of the inefficiency or welfare loss that arises when a market operates with monopoly power or other distortions, and is not a cost of not having a monopoly. Rent seeking may contribute to deadweight loss by diverting resources away from productive activity or creating market inefficiencies, but it is not always irrational for rent seekers, as they may gain significant benefits from capturing economic rents or other advantages through political or legal means.

Which of the Following Statements Is True