Rent and Transfer Earning
Modern economists make use f the transfer earnings in explaining econ m explained in a previous . I tra carui.igs represent the amount which a factor” r c n in its next best paid alternative use. Suppose, c
or land yields in its present lISC Rs. 500 a year suppose further that if it is transferred to its next use. it will yield Rs. 400. In its present use. it yield Rs. 100 more than its next best use. This sum of R . lOll is a sort of surplus that the land is yielding in it. nl use. This surplus is called rent.
In the modern sense, therefore, economic rent surplus or excess over transfer earnings. This or economic rent is not peculiar to land, it he I”ullrl in other Iactor of production too