It estimated, for example, that a BA short-haul flight operating out of Gatwick would show an additional profit of £2 million per year at Heathrow. This minimum payment is known as TRANSFER EARNINGS and it represents an OPPORTUNITY COST.Thus, for example, a person might just be willing to work as a lecturer for a minimum of £1,000 per month because he could earn this amount working in … For years, the scarcity of organic fuel has been inspiring scientists to come up with renewable energy sources. economic rent a money payment made for a FACTOR OF PRODUCTION that is over and above the minimum payment to keep it in its present use. Google Classroom Facebook Twitter. Introduction to economics. The rent money she pays for a factory to produce her beverage line is an example of capital resources/ land/labor/ capital Which of these statements demonstrate the economic concept of scarcity? An introduction to the concepts of scarcity, choice, and opportunity cost. Four factors of production. Lesson summary: Scarcity, choice, and opportunity costs. Failures P Externalities Harbor: port + resort hotel Port uses harbor for waste Resort hotel wants clean water (no pollution control, damage) Q MC P MC S D What leads to this? Seasonal offers are used to create scarcity and encourage sales because seasons and holidays don’t last that long. MUC = marginal user cost MEC = marginal extraction cost scarcity rent MUC MEC + MUC = P MEC D Q 2. When the demand for housing is high, but supply is low, home prices often rise. Scarcity rent is the price of land owing to its shortage, rather than to any particular quality of the land. Actually, this is the reason stores such as Starbucks offer pumpkin-flavored products during the fall. Scarcity rent In this way, rent will arise when supply of land is inelastic. Continuing the two period example and considering only the first period, scarcity rent is given by the following graph. Scarcity rent is an opportunity cost, appropriated by owner of resource. In general, the less plentiful things are relative to demand—whether buildable land, MarkMcGwire home run balls, or New York taxi medallions—the higher the scarcity rent. The housing market is a good example of how supply and demand works within an industry. The scarcity of jobs in the town has caused the crime rate to increase dramatically. Scarcity and rivalry. Scarcity Rent. Email. It undertook research that showed that revenues from flights to a number of destinations from Heathrow greatly exceeded those from similar flights from Gatwick. 3. significant scarcity rent. Because of the scarcity of apartments in the city, the rental rates are quite high. Producer surplus is given by both areas because you don't actually pay for marginal user cost. Introduction to economics. 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