The document discusses the concept of quasi rent. It defines quasi rent as a temporary gain earned by a factor of production due to a temporary limitation in its supply in the short run. Specifically: - Quasi rent arises for capital equipment/machinery in the short run when its supply is fixed and it earns surplus over its transfer earnings. - It is measured as the total revenue earned minus the total variable costs. - Unlike economic rent which persists in both the short and long run, quasi rent disappears in the long run when the supply of the factor can be increased.

1. QUASI RENT

2. QUASI RENT
DR. LAXMI NARAYAN YADAV
ASSISTANT PROFESSOR OF ECONOMICS
GOVT. P.G. COLLEGE MAHENDERGARH
E-mail: laxmi_narayan70@yahoo.com

3. QUASI RENT
 The concept of quasi-rent owes its origin to Dr. Alfred
Marshall.
 Marshall is of the view that a differential surplus which
arises from a factor of production, whose supply is
fixed for all times to come should be named as rent but
a temporary gain which a factor or production earns
due to temporary limitation of its supply should be
called quasi-rent..
 Quasi-rent is a temporary gain which is earned by a
factor of production due to the temporary limitation of
its supply.

4. QUASI RENT
In the short run, machinery has no alternative use and
therefore its supply will remain fixed in the short run. Thus, the
transfer earnings of the capital equipment or machinery in the
short run are zero. Therefore, the whole of the earnings of the
machinery in the short run are surplus over transfer earnings
and therefore represent rent.
Professors Stonier and Hague rightly remark: The supply
of machines is fixed in the short run whether they are paid
much money or little so they earn a kind of rent. In the
long run this rent disappears for it is not a true rent.

5. MEASUREMENT OF QUASI RENT
Quasi Rent as Surplus over Variable Costs
The variable costs must be recovered in the short
run otherwise the production would be stopped.
Whatever excess earnings over and above the total
variable costs are made are ascribed to the
machines (i.e. fixed factor).
Quasi Rent = Total Revenue Earned -Total
Variable Costs

6. MEASUREMENT OF QUASI RENT
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7. Similarities
 Quasi rent arises when the demand for man made
goods increases, while rent arises with the rise in the
demand for the products of land.
 Just as the supply of man made appliances is fixed in
the short period, so is that of land.
 Transfer earnings are as much important for
determining quasi rent as they are for determining rent.
 Quasi rent like the rent of land is price determined and
not price determining.
Distinction Between Rent
and Quasi Rent

8. Differences
 Rent is a payment for natural gifts of nature like
land. Quasi rent is a payment for man made
appliances like machines.
 As the supply of land cannot be changed, rent
persists in both short run and long run. But quasi
rent is a short run phenomenon which disappears
in the long run when the supply of man made
goods is increased.
 Rent is permanent in nature while quasi rent is a
temporary phenomenon.
Distinction Between Rent
and Quasi Rent

9. Differences
 Rent is the difference between total revenue and total
costs whereas quasi rent is difference between total
revenue variable costs.
 Rent is regarded as unearned income. But quasi rent is
a necessary payment which all factors of production
receive due to their inelastic supply in the short run.
 Rent arises due to differences in fertility of land whereas
quasi rent arises due to the scarcity of man made
appliances in the short run.
 Rent cannot be zero but quasi rent can be zero when the
short run price of the commodity equals its average
variable cost.
Distinction Between Rent and Quasi Rent