Microeconomics Chapter 29 Review

Rent (economic rent) is payment in excess of what people would be willing to accept

-Rent is determined by the law of supply and demand
-The demand for land is the MRP schedule of the highest bidder for a specific piece of land
-The rent is set by the intersection of supply and demand
-Supply for land is completely inelastic

The interest rate is determined by the law of supply and demand, and is interest paid divided by amount borrowed

Large corporations have no implicit cost, but the majority of the nation's corporations are very small businesses with substantial implicit costs

-Entrepreneur as a risk taker
-Entrepreneur as an innovator
-Entrepreneur as monopolist
-Entrepreneur as an exploiter of labor

Starting a business is risky, but if a new business succeeds, they may get a high rate of return

Reward is profits due to innovation (not invention or amount of capital)

Makes large profits by holding output below what the public wishes to purchase

Capital comes from the surplus value that has been stolen from the worker