1 / 15

Rent, Interest, and Profit

Rent, Interest, and Profit. Rent. Price paid for land and other natural resources Perfectly inelastic supply. DETERMINATION OF LAND RENT. Changes in the demand for land. S. Inelastic Supply. R. Q. DETERMINATION OF LAND RENT. Changes in the demand for land. S. Inelastic Supply...

aurek
Download Presentation

Rent, Interest, and Profit

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Rent, Interest, and Profit

  2. Rent • Price paid for land and other natural resources • Perfectly inelastic supply

  3. DETERMINATION OF LAND RENT Changes in the demand for land... S Inelastic Supply... R Q

  4. DETERMINATION OF LAND RENT Changes in the demand for land... S Inelastic Supply... combines with demand... R D1 Q Acres of Land

  5. DETERMINATION OF LAND RENT Changes in the demand for land... S Inelastic Supply... combines with demand... R to determine rent R1 D1 Q Acres of Land

  6. DETERMINATION OF LAND RENT Changes in the demand for land... S If demand decreases... rent decreases. R R1 R2 D1 D2 Q Acres of Land

  7. DETERMINATION OF LAND RENT Changes in the demand for land... S If demand decreases... rent decreases. ...and decreases R R1 R2 D1 R3 D2 D3 Q Acres of Land

  8. DETERMINATION OF LAND RENT Changes in the demand for land... S If demand decreases... rent decreases. ...and decreases ...and decreases ...and decreases R R1 R2 D1 R3 D2 D3 Q D4 Acres of Land

  9. DETERMINATION OF LAND RENT Changes in the demand for land... If demand is so low that there is no rent determined, land is said to be a free good, commanding no rent. S R R1 R2 D1 R3 D2 D3 Q D4 Acres of Land

  10. LAND RENT Productivity Differences(Location, Location, Location)

  11. INTEREST • The Price Paid for Capital • It is the payment to use money • Money is not a Resource Rate Determination...

  12. LOANABLE FUNDS THEORY OF INTEREST S I i = 8% D F0 Q of LF

  13. INTEREST RATES • Role of the Interest Rate • Growth • Allocation of Capital • R&D Spending • Nominal and Real Interest Rates • Nominal – Inflation = Real

  14. Economic Profit • Payment to entrepreneurs • Functions of economic profit

  15. Share of Income • Wages receive 70-80% • The rest is rent, interest, & profit

More Related