P. 22. Rent, p. 309.

          Rent - payment for land.

          Economic rent - payment for any factor of production over and above that which necessary to keep the factor in its present use (David Ricardo)(above S in gr).

Assumptions

      supply of the land is fixed

      Land has only one use - to grow food (S is vertical, all is economic rent).

The demand for land is derived. Rent fulfils no purpose in supply, so is just producers' surplus.

          Transfer earnings - payment necessary to keep a factor in its present use.

          Quasi rent - economic rent at short run and transfer earnings in the long run.

After Ricardo:       Economic rent is applied to all factors           Supply is fixed only in global sense.

Some believe that rent is the ideal form of tax. Tax was placed on land in 1970. House prices rocketed and speculation with land stopped. Also the government could own all land(reduces inequality)