RENT, INTEREST, AND PROFIT Pertemuan 22 Matakuliah : J0114-Teori Ekonomi Tahun : 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 Bina Nusantara University

Economic Rent The Determination of Land Rent Land Rent (Dollars) b Bina Nusantara University L0 Acres of Land D4

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 Bina Nusantara University

Interest Stated as a Percentage Money is Not a Resource Loanable Funds Theory of Interest Supply of Loanable Funds Demand for Loanable Funds O 27.1 Bina Nusantara University

Interest The Market for Loanable Funds Interest Rate (Percent) 8% D F0 Bina Nusantara University Quantity of Loanable Funds

Interest Extending the Model Financial Institutions Changes in Supply Changes in Demand Other Participants Bina Nusantara University

Interest Range of Interest Rates Pure Rate of Interest Risk Maturity Loan Size Taxability Pure Rate of Interest Bina Nusantara University

Interest Role of the Interest Rate Application: Usury Laws 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 Bina Nusantara University

Economic Profit Explicit Costs Implicit Costs Economic or Pure Profit Role of the Entrepreneur Normal Profit Bina Nusantara University