Suppose that Michael Jordan, star basketball player, earns a pure economic rent.This means that:
A)the demand curve for his talent is perfectly elastic.
B)the supply curve for his talent is perfectly inelastic.
C)the demand curve for his talent is downward-sloping.
D)the supply curve for his talent is perfectly elastic.
E)market equilibrium will be undefined.

Question

Quizplus · Accepted Answer

A pure economic rent occurs when the supply of a factor of production is perfectly inelastic. In Michael Jordan's case, his unique talent and skills cannot be easily replicated, making the supply of his talent inelastic, leading to an economic rent.

Suppose That Michael Jordan, Star Basketball Player, Earns a Pure