Q.Write a short note on: Quasi-rent

Quasi-rent, a concept of Alfred Marshall, is the short-period surplus earned by man-made appliances like machines and buildings whose supply is fixed for the time being. It is 'rent-like' only in the short run; in the long run, when supply can be adjusted, quasi-rent disappears.

Meaning

Marshall pointed out that rent is earned by land because its supply is fixed. In the short run, however, the supply of certain man-made factors of production — such as machines, instruments, buildings and equipment — is also fixed, because they cannot be produced quickly. Therefore, like land, they too can earn a surplus income in the short period. Marshall called this surplus quasi-rent, that is, rent-like earnings.

Explanation

Quasi-rent is the excess of total revenue earned by such a fixed factor over its total variable cost in the short run. Because the supply of these appliances is temporarily fixed, an increase in demand for their product raises their earnings above what is needed to keep them in use, and this surplus is quasi-rent.

The difference between true rent and quasi-rent is that:

• the supply of land is permanently fixed, so land rent is permanent; while …