Presentation is loading. Please wait.

Presentation is loading. Please wait.

16 - 1 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest.

Published byFelicity Burns Modified over 9 years ago

Similar presentations

Presentation on theme: "16 - 1 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest."— Presentation transcript:

1

2 16 - 1 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show Rent, Interest, and Profit 16 C H A P T E R

3 16 - 2 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show ECONOMIC RENT Fixed Total Supply Perfectly Inelastic Supply Changes in Demand Free Goods Determination of Land Rent …graphically

4 16 - 3 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show Land Rent (dollars) Acres of Land S 0 DETERMINATION OF LAND RENT Changes in the demand for land... Inelastic Supply...

5 16 - 4 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show Land Rent (dollars) Acres of Land S 0 DETERMINATION OF LAND RENT Changes in the demand for land... Inelastic Supply... combines with demand... D1D1

6 16 - 5 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show R1R1 Land Rent (dollars) Acres of Land S 0 DETERMINATION OF LAND RENT Changes in the demand for land... Inelastic Supply... combines with demand... D1D1 to determine rent

7 16 - 6 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show Land Rent (dollars) Acres of Land R1R1 S D2D2 D1D1 R2R2 0 If demand decreases... DETERMINATION OF LAND RENT Changes in the demand for land... rent decreases.

8 16 - 7 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show Land Rent (dollars) D3D3 Acres of Land R1R1 S D2D2 D1D1 R2R2 R3R3 0 If demand decreases... rent decreases....and decreases DETERMINATION OF LAND RENT Changes in the demand for land...

9 16 - 8 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show Land Rent (dollars) D3D3 Acres of Land R1R1 S D4D4 D2D2 D1D1 R2R2 R3R3 0 If demand decreases... rent decreases....and decreases DETERMINATION OF LAND RENT Changes in the demand for land......and decreases

10 16 - 9 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show Land Rent (dollars) D3D3 Acres of Land R1R1 S D4D4 D2D2 D1D1 R2R2 R3R3 0 DETERMINATION OF LAND RENT Changes in the demand for land... If demand is so low that there is no rent determined, land is said to be a free good, commanding no rent.

11 16 - 10 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show A Single Tax on Land A Socialistic Position Henry George’s Proposal Single-Tax Movement (Nineteenth Century) Criticisms LAND RENT: A SURPLUS PAYMENT An Incentive Function

12 16 - 11 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show Productivity Differences Alternative Uses and Costs LAND RENT: A SURPLUS PAYMENT Rent Differences Society’s Perspective of Rent as a Cost Versus that of the Individual

13 16 - 12 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show INTEREST The Price Paid for the Use of Money Stated as a Percentage Money NOT a Resource Rate Determination... Supply of Loanable Funds Demand for Loanable Funds

14 16 - 13 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show Interest Rate, (percent) Quantity of Loanable Funds LOANABLE FUNDS THEORY OF INTEREST i = 8% D F0F0 S

15 16 - 14 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show EXTENDING THE MODEL Financial Institutions Changes in Supply Changes in Demand Other Participants

16 16 - 15 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show RANGE OF INTEREST RATES Risk Maturity Loan Size Taxability Market Imperfections

17 16 - 16 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show RANGE OF INTEREST RATES Pure Rate of Interest Role of the Interest Rate Interest and Total Output Interest and the Allocation of Capital Interest and R&D Spending Nominal and Real Interest Rates

18 16 - 17 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show 0 2% 4% 6% 8% 10% Hungary Poland Mexico Australia South Korea Sweden United Kingdom Greece Canada United States Japan GLOBAL PERSPECTIVE Short-Term Nominal Interest Rates, Selected Nations, 2002 Source: Organization for Economic Cooperation and Development

19 16 - 18 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show APPLICATION: USURY LAWS Nonmarket Rationing Gainers and Losers Inefficiency

20 16 - 19 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show ECONOMIC PROFIT Explicit Costs Implicit Costs Economic or Pure Profit Role of the Entrepreneur Normal Profit

21 16 - 20 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show ECONOMIC PROFIT Sources of Economic Profit Static Economy Risk and Profit Insurable Risks Uninsurable Risks Changes in Economy Structural Changes Government Policy

22 16 - 21 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show ECONOMIC PROFIT Innovations and Profit Monopoly and Profit Functions of Profit Profit and Total Output Profit and Resource Allocation Income Shares

23 economic rent incentive function single-tax movement loanable funds theory of interest pure rate of interest nominal interest rate real interest rate usury laws explicit costs implicit costs economic or pure profit normal profit static economy insurable risks uninsurable risks ENDBACK Copyright McGraw-Hill/Irwin, 2005

24 16 - 23 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest Range of Interest Rates Application: Usury Laws Economic Profit Key Terms Previous Slide Next Slide End Show Coming Next: Chapter 17 GOVERNMENT AND MARKET FAILURE

Download ppt "16 - 1 Copyright McGraw-Hill/Irwin, 2005 Economic Rent Determination of Land Rent Land Rent: A Surplus Payment Interest Loanable Funds Theory of Interest."

Similar presentations

Financial Institutions and Financial Markets To study the economics of financial institutions and markets we distinguish between Finance and money.

Financial Institutions and Financial Markets To study the economics of financial institutions and markets we distinguish between Finance and money.
Interest, Rent, and Profit. Interest It is the price for credit or loanable funds. It is also called the return earned by capital as an input in the production.

Interest, Rent, and Profit. Interest It is the price for credit or loanable funds. It is also called the return earned by capital as an input in the production.
Chapter 29 Rent, Interest and Profit

Chapter 29 Rent, Interest and Profit
Ch 27 Rent, Interest, & Profit. A.Economic Rent Price paid for land or other resources that are completely fixed in supply (perfectly inelasticity supply)

Ch 27 Rent, Interest, & Profit. A.Economic Rent Price paid for land or other resources that are completely fixed in supply (perfectly inelasticity supply)
The Market for Loanable Funds Chapter 13. The Market for Loanable Funds Financial markets coordinate the economy’s saving and investment in the market.

The Market for Loanable Funds Chapter 13. The Market for Loanable Funds Financial markets coordinate the economy’s saving and investment in the market.
15 - 1 Copyright McGraw-Hill/Irwin, 2005 Labor, Wages, and Earnings General Level of Wages Real Wages and Productivity Purely Competitive Labor Market.

Copyright McGraw-Hill/Irwin, 2005 Labor, Wages, and Earnings General Level of Wages Real Wages and Productivity Purely Competitive Labor Market.
13 - 1 Copyright McGraw-Hill/Irwin, 2005 Technological Advance U.S. R&D Expenditures Role of Entrepreneurs and Other Innovators A Firm’s Optimal Amount.

Copyright McGraw-Hill/Irwin, 2005 Technological Advance U.S. R&D Expenditures Role of Entrepreneurs and Other Innovators A Firm’s Optimal Amount.
Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Microeconomics 7/e by Jackson and McIver Slides prepared by Muni Perumal, University of Canberra,

Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Microeconomics 7/e by Jackson and McIver Slides prepared by Muni Perumal, University of Canberra,
24 FINANCE, SAVING, AND INVESTMENT © 2012 Pearson Addison-Wesley.

24 FINANCE, SAVING, AND INVESTMENT © 2012 Pearson Addison-Wesley.
9 - 1 Copyright McGraw-Hill/Irwin, 2005 Economic Costs Short-Run and Long-Run Short-Run Production Relationships Short-Run Production Costs Short-Run.

9 - 1 Copyright McGraw-Hill/Irwin, 2005 Economic Costs Short-Run and Long-Run Short-Run Production Relationships Short-Run Production Costs Short-Run.
Ch 29: Interest, Rent, and Profit Del Mar College John Daly ©2003 South-Western Publishing, A Division of Thomson Learning.

Ch 29: Interest, Rent, and Profit Del Mar College John Daly ©2003 South-Western Publishing, A Division of Thomson Learning.
EXCHANGE RATES, THE BALANCE OF PAYMENTS, AND TRADE DEFICITS 38 C H A P T E R.

EXCHANGE RATES, THE BALANCE OF PAYMENTS, AND TRADE DEFICITS 38 C H A P T E R.
2 - 1 Copyright McGraw-Hill/Irwin, 2002 The Foundation of Economics Employment and Efficiency Unemployment, Growth, and the Future Economic Systems The.

2 - 1 Copyright McGraw-Hill/Irwin, 2002 The Foundation of Economics Employment and Efficiency Unemployment, Growth, and the Future Economic Systems The.
17 - 1 Copyright McGraw-Hill/Irwin, 2002 Growth Economics Production Possibilities Analysis Supply Determinants of Real Output Growth in the AD-AS Model.

Copyright McGraw-Hill/Irwin, 2002 Growth Economics Production Possibilities Analysis Supply Determinants of Real Output Growth in the AD-AS Model.
The Federal Reserve controls the amount of bank activity and thus influences a wide variety of interest rates. The government also has an impact on the.

The Federal Reserve controls the amount of bank activity and thus influences a wide variety of interest rates. The government also has an impact on the.
18 - 1 Copyright McGraw-Hill/Irwin, 2002 Deficits, Surpluses, and Debt The Public Debt Ownership of the Public Debt Substantive Issues The Crowding Out.

Copyright McGraw-Hill/Irwin, 2002 Deficits, Surpluses, and Debt The Public Debt Ownership of the Public Debt Substantive Issues The Crowding Out.
31 - 1 Copyright McGraw-Hill/Irwin, 2002 Public Choice Theory Government Failure Apportioning the Tax Burden Tax Applications Tax Incidence and Efficiency.

Copyright McGraw-Hill/Irwin, 2002 Public Choice Theory Government Failure Apportioning the Tax Burden Tax Applications Tax Incidence and Efficiency.
33 - 1 Copyright McGraw-Hill/Irwin, Inc. 2005 Economics of Agriculture Effect of Output Changes on Farm Prices and Income Long-Run Farm Problem Economics.

Copyright McGraw-Hill/Irwin, Inc Economics of Agriculture Effect of Output Changes on Farm Prices and Income Long-Run Farm Problem Economics.
33 - 1 Copyright McGraw-Hill/Irwin, 2002 Economics of Agriculture Effect of Output Changes on Farm Prices and Income Long-Run Farm Problem Economics of.

Copyright McGraw-Hill/Irwin, 2002 Economics of Agriculture Effect of Output Changes on Farm Prices and Income Long-Run Farm Problem Economics of.
Rent, Interest, and Profit Chapter 14 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Rent, Interest, and Profit Chapter 14 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Similar presentations

Ads by Google