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Chapter 22 Terms 102 - E conomic Rent Economic rent is a...

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Economic Rent: Economic rent is a payment for the use of any resource over and above its opportunity cost. It can be viewed as a payment to resource owners in excess of what would be necessary to call forth that amount of the resource. Economic Rents and the Allocation of Resources: Economic rents allocate resources to their highest valued uses. Those who can most efficiently use the resources offer the highest payment. Proprietorship: A business owned by one individual who makes the business decisions, receives all of the profits, and is legally responsible for all of the debts of the firm. Partnership: A partnership is a business owned by two or more co- owners, partners, who share the responsibilities and the profits of the firm and are individually liable for all of the debts of the partnership. Corporation: A legal entity that may conduct business in its own name just as an individual does. The owners of a corporation, called shareholders, own shares of the firm’s profits and have limited liability.
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