Matakuliah
Tahun
: J0114-Teori Ekonomi
: 2009
RENT, INTEREST, AND PROFIT
Pertemuan 22
Economic Rent
Economic Rent is the price paid for resources
such as land whose supply is perfectly inelastic
Land rent is a surplus payment, because land would
be available to society even if this rent were not paid
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Economic Rent
The Determination of Land Rent
Land Rent (Dollars)
S
R1
D1
R2
D2
R3
D3
a
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0
b
L0
Acres of Land
D4
4
Economic Rent
• Application: A Single Tax on Land
– Henry George’s Proposal
– Single Tax Movement
– Criticisms
• Productivity Differences and Rent
Differences
• Alternative Uses of Land
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Interest
•
•
•
•
•
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Stated as a Percentage
Money is Not a Resource
Loanable Funds Theory of Interest
Supply of Loanable Funds
Demand for Loanable Funds
6
O 27.1
Interest
The Market for Loanable Funds
Interest Rate (Percent)
S
i=
8%
D
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0
F0
Quantity of Loanable Funds
7
Interest
• Extending the Model
– Financial Institutions
– Changes in Supply
– Changes in Demand
– Other Participants
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Interest
• Range of Interest Rates
–
–
–
–
Risk
Maturity
Loan Size
Taxability
• Pure Rate of Interest
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Interest
• Role of the Interest Rate
– Interest and Total Output
– Interest and the Allocation of Capital
– Interest and R&D Spending
– Nominal and Real Interest Rates
• Application: Usury Laws
– Nonmarket Rationing
– Gainers and Losers
– Inefficiency
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Economic Profit
•
•
•
•
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Explicit Costs
Implicit Costs
Economic or Pure Profit
Role of the Entrepreneur
– Normal Profit
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