Rents, Economic

Rents have a specific meaning in economic theory. They are equal to any excess payment made to a resource over and above the amount necessary to keep that resource under current employment. This necessary amount is equal to the opportunity cost of the resource; that is, the payment it could receive in its most desired alternative employment. Consider, for example, a famous movie actor who receives a very high salary due to the large revenues generated for movie producers. Of course, if the film industry did not exist, this actor would not be famous and could not, therefore, generate such large revenues. As such, the salary he or she could secure as an actor would be a lot less. The amount he or she would ...