Which of the following best defines the concept of 'Quasi-Rent' in economics?

💡 Solution & Explanation

Quasi-rent represents the short-run earnings of a factor of production, such as man-made machinery or capital equipment, whose supply is completely inelastic in the short run but elastic in the long run. This analytical framework was introduced by Alfred Marshall to distinguish between the permanent earnings of natural land and the temporary earnings of fixed capital. Confusing choices incorrectly point to agricultural land rent or general monopoly earnings, which differ fundamentally in duration and derivation. In competitive markets, quasi-rent disappears in the long run as new capital goods are produced and supplied.