Any payment to a factor of production in excess of what is necessary to keep that factor in its present employment is known as?
Question 1 Report
Any payment to a factor of production in excess of what is necessary to keep that factor in its present employment is known as?
Answer Details
Any payment made to a factor of production (such as labor, capital or land) which is in excess of what is required to keep that factor in its current use is called economic rent. This means that the payment is more than the minimum required to retain the factor in its current use, as the factor is relatively scarce or in high demand. Economic rent is a form of income that can be earned by factors that have a limited supply, such as prime land in urban areas or highly skilled labor.
Therefore, the answer is: economic rent. Note that real income refers to the purchasing power of income, profit is the excess of total revenue over total cost, and real wage is the wage rate adjusted for inflation.
Download The App On Google Playstore
Everything you need to excel in your exams
Personalized AI Learning Chat Assistant
200,000+ Exam Questions Across IGCSE, JAMB, WAEC & NECO
Over 3,900 Lesson Notes
Offline Support - Learn Anytime, Anywhere
Green Bridge Timetable
Literature Summaries & Potential Questions
Track Your Performance & Progress
In-depth Explanations for Comprehensive Learning