3. (4 points) Indicate whether each of the following situations is likely to pro

Question

3. (4 points) Indicate whether each of the following situations is likely to produce quasirents,

differential rents, scarcity rents, and/or resource rents (note: more than one

category may apply). Also indicate whether the rents are earned or unearned.

a. A firm receives a patent for a new production technology that will reduce costs.

b. A fishing vessel is given a quota to catch a certain number of fish.

c. A farmer’s crop yields have increased by 10% due to irrigation channels that the

farmer installed last year.

Explanation / Answer

a. Quasirents (earned)

b. Scarcity rents (unearned)

c. Differential rent (earned)

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