Scarcity Theory Apart from agricultural land there can also like mountain , forest, office building, shop, etc. If such land is available at very strategic location it earns more return for the owner. However such land is scare . On the other hand if land is situated at some unattractive location it cannot produce much rent .Thus rent is not only the reward of fertility but it’s location and it’s scarcity.

QUASIRENTWhat is a Quasirent ? Rent is reward of scarcity of production

factor but quasirent is a rent which takes place in short run and it is the rent of tentative or short term scarcity of production factors.

It is an extension of the Ricardian theory of scarcity based rent.

There are certain production factors whose supply is scared during short run period ,or when demand of such factors increases.

Therefore the gap between Demand and

Supply is generated and production factor earns supernatural rent.

However when supply of factor increases in long run or when demand comes down the supernormal rent gets disappeared.

Thus as it is a temporary or tentative rent it is called Quasirent .

The Modern Theory “In economics ,whenever unit of a factor of production is receiving an income greater than the minimum amount necessary to induce that factors to remain in its present occupation ,the surplus of receipt over its minimum supply price, may be called an Economic rent .” --- Meyers

Minimum supply price

Minimum supply price is the price or remuneration which can motivate the owner of production factor owned by him [ a rich person is owner of capital ,a laborers is owner of labour and landlord is owner of land ].