
214 Chapter 9
than OP
3
. at is, minimum payment that must be made to all but the last factor unit, in order
to prevent the transfer of factors to alternative uses, is less than the equilibrium price OP
3
. In
other words, the transfer earning of all factor units, excepting the last one, is less than their
actual earning. For example, the transfer earning of OKth unit of factors is only OP
2
whereas the
actual earning, i.e., the market factor price, is OP
3
. us, economic rent earned by the OK units
is OP
3
− OP
2
− P
2
O
3
. e same exercise may be performed for all the ON factor units to compute
their economic rent. e shaded area, P
1
P
2
P
3