2. Presented by- Orion Group Group Details : NameID Amatus Salam Kalyan Chowdhury2014-3-16-019 Shuchita Nawreen2014-2-16-023 Submitted To Subrata Kumar Lecturer, School of business

3. Introduction Compensation paid by a tenant to the property owner for use of occupancy of a property. In Economics, surplus generated by the supply of any resource ( capital, human, natural) over the amount necessary to produce or bring forth, the quantity of a resources. Rent= Actual earning – Transfer earning

4. Economic Rent: economic rent is any payment to a factor of production in excess of the cost needed to bring that factor into production. Contract Rent: Contract rent is the payment which is made for the use of land and the capital invested thereon, or pre-determined conditions.

5. Economic Rent Vs Contract Rent 1)In the modern economic literature all the factors of production as land, labor, capital and entrepreneur are assumed to earn rent. 1)The term contract rent refers to the gross payment to the owner of the factors in exchange for their use. 2) This concept of rent is the economic rent, which is defined as the excess amount over the transfer earnings that is paid to the owner of the factor. 2) The contract rent is what we usually practice in our day-to-day life. Sometimes, it is referred to as the gross rent. 3) Economic rent concerns with the economic meaning of rent. 3) Contract rent concerns with the practical meaning of rent.

6. Economic Rent Vs Contract Rent 4) The economic rent as surplus or excess of the payment over & above the minimum required amount to keep factors in its current use. 4) It is the actual payment to the owner of the factors. It is just like the periodical payment to the owner of the house, owner of machinery, owner of land. 5) The implicit assumption here is that the factors always in the best manner, unlike the classical view, this modern view considers the supply of land for example, from the perspective of industries and individual farmer or producers. 5) The contract rent is determined by the agreement between two parties- owner and renter and includes the economic rent, transfer earnings and other improvements factors. These improvements in the form of interest rewards for the capital expenditures undertaken by the owner of the factors are thus, included in the contract rent.

12. Rent is surplus earned by a factor over & above the minimum earnings necessary to introduce to do its work: In case the supply of a factor is perfectly elastic, it cannot earn any surplus over and above its supply price. Because whenever such a factor is found to be earning more than its supply price, more units of this factor will rush in and the surplus earning will disappear. This is so because, under perfect competition, the market price of a factor must equal to its supply price.

13. Rent is surplus earned by a factor over & above the minimum earnings necessary to introduce to do its work: In case the supply of a factor is perfectly elastic, it cannot earn any surplus over and above its supply price. Because whenever such a factor is found to be earning more than its supply price, more units of this factor will rush in and the surplus earning will disappear. This is so because, under perfect competition, the market price of a factor must equal to its supply price.

16. Conclusion

17. THANK YOU!