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LSDefine
Simple English definitions for legal terms
economic rent
Read a random definition: alloynour
A quick definition of economic rent:
Economic rent: This is the extra money earned from using something like a worker or land, after all the costs of using it have been paid. It's like getting a bonus for using something that is in high demand. It's also the money earned that is considered fair for the amount of money and effort put into it.
A more thorough explanation:
Definition: Economic rent refers to the return gained from an economic resource, such as a worker or land, that is above the minimum cost of keeping the resource in service. It is also the rent that yields a fair return on capital and expenses.
Examples:
- A landlord charges a rent of $1,500 per month for an apartment that costs them $1,200 per month to maintain. The $300 difference is the economic rent.
- A skilled worker earns a salary of $80,000 per year, which is higher than the minimum wage for their job. The extra income they earn is considered economic rent.
These examples illustrate how economic rent is the surplus income earned from an economic resource that exceeds the minimum cost of keeping that resource in service. In other words, it is the additional income earned beyond what is necessary to maintain the resource.