29<br />C H A P T E R<br />Rent, <br />Interest, <br />and Profit<br />
ECONOMIC RENT<br /><ul><li>The price paid for the use of land and other natural resources, the supply of which is fixed…gr...
DETERMINATION OF LAND RENT<br />Changes in the demand for land...<br />S<br />Inelastic Supply...<br />combines with<br />...
DETERMINATION OF LAND RENT<br />Changes in the demand for land...<br />S<br />Inelastic Supply...<br />combines with<br />...
DETERMINATION OF LAND RENT<br />Changes in the demand for land...<br />S<br />If demand decreases...<br />rent decreases. ...
DETERMINATION OF LAND RENT<br />Changes in the demand for land...<br />S<br />If demand decreases...<br />rent decreases. ...
DETERMINATION OF LAND RENT<br />Changes in the demand for land...<br />S<br />If demand decreases...<br />rent decreases. ...
DETERMINATION OF LAND RENT<br />Changes in the demand for land...<br />If demand is so low<br />that there is no rent<br /...
INTEREST<br />The Price Paid for the Use of Money<br />Stated as a Percentage<br />Money NOT a Resource<br />Supply of Loa...
LOANABLE FUNDS<br />THEORY OF INTEREST<br />S<br />i = <br />8%<br />Interest Rate, (percent)<br />D<br />F0<br />Quantity...
EXTENDING THE MODEL<br />Financial Institutions<br />Changes in Supply<br />Changes in Demand<br />Other Participants<br />
KEY TERMS<br />economic rent<br />incentive function<br />single-tax movement<br />loanable funds theory of interest<br />...
Coming Next:<br />GOVERNMENT<br />AND<br />MARKET FAILURE<br />Chapter 30<br />
AP Micro Rent, Interest, Profit
Upcoming SlideShare
Loading in …5
×

AP Micro Rent, Interest, Profit

2,093 views

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
2,093
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
39
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

AP Micro Rent, Interest, Profit

  1. 1. 29<br />C H A P T E R<br />Rent, <br />Interest, <br />and Profit<br />
  2. 2. ECONOMIC RENT<br /><ul><li>The price paid for the use of land and other natural resources, the supply of which is fixed…graphically</li></li></ul><li>DETERMINATION OF LAND RENT<br />Changes in the demand for land...<br />S<br />Inelastic Supply...<br />Land Rent (dollars)<br />0<br />Acres of Land<br />
  3. 3. DETERMINATION OF LAND RENT<br />Changes in the demand for land...<br />S<br />Inelastic Supply...<br />combines with<br />demand...<br />Land Rent (dollars)<br />D1<br />0<br />Acres of Land<br />
  4. 4. DETERMINATION OF LAND RENT<br />Changes in the demand for land...<br />S<br />Inelastic Supply...<br />combines with<br />demand...<br />to <br />determine rent<br />R1<br />Land Rent (dollars)<br />D1<br />0<br />Acres of Land<br />
  5. 5. DETERMINATION OF LAND RENT<br />Changes in the demand for land...<br />S<br />If demand decreases...<br />rent decreases. <br />R1<br />Land Rent (dollars)<br />R2<br />D1<br />D2<br />0<br />Acres of Land<br />
  6. 6. DETERMINATION OF LAND RENT<br />Changes in the demand for land...<br />S<br />If demand decreases...<br />rent decreases. <br />...and decreases<br />R1<br />Land Rent (dollars)<br />R2<br />D1<br />R3<br />D2<br />D3<br />0<br />Acres of Land<br />
  7. 7. DETERMINATION OF LAND RENT<br />Changes in the demand for land...<br />S<br />If demand decreases...<br />rent decreases. <br /> ...and decreases<br />...and decreases<br /> ...and decreases<br />R1<br />Land Rent (dollars)<br />R2<br />D1<br />R3<br />D2<br />D3<br />0<br />D4<br />Acres of Land<br />
  8. 8. DETERMINATION OF LAND RENT<br />Changes in the demand for land...<br />If demand is so low<br />that there is no rent<br />determined, land is<br />said to be a free good,<br />commanding no rent.<br />S<br />R1<br />Land Rent (dollars)<br />R2<br />D1<br />R3<br />D2<br />D3<br />0<br />D4<br />Acres of Land<br />
  9. 9. INTEREST<br />The Price Paid for the Use of Money<br />Stated as a Percentage<br />Money NOT a Resource<br />Supply of Loanable Funds<br />Demand for Loanable Funds<br />Rate Determination...<br />
  10. 10. LOANABLE FUNDS<br />THEORY OF INTEREST<br />S<br />i = <br />8%<br />Interest Rate, (percent)<br />D<br />F0<br />Quantity of Loanable Funds<br />
  11. 11. EXTENDING THE MODEL<br />Financial Institutions<br />Changes in Supply<br />Changes in Demand<br />Other Participants<br />
  12. 12. KEY TERMS<br />economic rent<br />incentive function<br />single-tax movement<br />loanable funds theory of interest<br />pure rate of interest<br />nominal interest rate<br />real interest rate<br />usury laws<br />explicit costs<br />implicit costs<br />economic or pure profit<br />normal profit<br />static economy <br />insurable risks<br />uninsurable risks<br />Copyright McGraw-Hill/Irwin, 2005<br />END<br />BACK<br />
  13. 13. Coming Next:<br />GOVERNMENT<br />AND<br />MARKET FAILURE<br />Chapter 30<br />

×