ABSTRACT
Rent may be defined as the difference between what the owner of factors of production – say, a worker or a landowner – earns by employing his factors in producing some current good(s) and the minimum sum he would accept to keep them there. It is the proper counterpart for the gain to factor-owners of a consumer surplus, the latter being regarded as the measure of gain to the consumer from the opportunity of buying some good(s) at the existing price(s). In both cases, however, the introduction of new opportunities in place of, or in addition to, favourable price changes will also raise his welfare and is measured by an increase in consumer surplus or rent. In general, the smaller these welfare effects that accompany price changes, the more accurate as an estimate of consumer surplus or rent will be the relevant area derived, respectively, from the individual's demand or supply schedule.
