3 4 points Indicate whether each of the following situations

3. (4 points) Indicate whether each of the following situations is likely to produce quasirents,

differential rents, scarcity rents, and/or resource rents (note: more than one

category may apply). Also indicate whether the rents are earned or unearned.

a. A firm receives a patent for a new production technology that will reduce costs.

b. A fishing vessel is given a quota to catch a certain number of fish.

c. A farmer’s crop yields have increased by 10% due to irrigation channels that the

farmer installed last year.

Solution

a. Quasirents (earned)

b. Scarcity rents (unearned)

c. Differential rent (earned)