Important Questions on Rent (Economics) for all Competitive Exams

Important Questions on Rent (Economics)

Important Questions on Rent (Economics) :‘Rent’ is one of the main topics in the Economics subject and it is of utmost importance for all those candidates who are preparing for the Government Competitive Exams like UPSC, IAS, PSC, NDA, SSC, CTET/ PSPET/ PTET etc.

But first of all, what is ‘Rent’?

Important Questions on Rent (Economics)

Rent: In economics, the term rent is applied only for payments made for factors of production which are in imperfectly elastic supply, with land as the main example. Classical economists considered rent as an income arising out of the service of land. Supply of land, for an economy, is fixed or perfectly inelastic. But according to modern Economists part of the income or total income of each factor of production can be rent. Modern meaning of rent is based on the concept of opportunity cost. The amount by which actual earning of a factor is higher than its transfer earning is called rent.

Rent = Actual Earning – Transfer Earning

Important Questions on Rent (Economics)


  1. Rent is paid for the use of the service of :

(a) Goods

(b) Capital

(c) Land

(d) Labour


  1. Which among the following is not a kind of rent?

(a) Economic Rent

(b) Scarcity Rent

(c) Differential Rent

(d) Physical Rent


  1. Ricardian theory of Rent discusses:

(a) Fertility and Scarcity of land

(b) Economic condition of a land

(c) Law of increasing returns

(d) None of these


  1. Extensive cultivation means:

(a) More land is used for production

(b) More units of labour is used

(c) More units of capital is used

(d) All of the above


Important Questions on Rent (Economics)


  1. Intensive Cultivation means:

(a) Law of diminishing returns

(b) More and more units of land and labour is used

(c) Law of increasing returns

(d) Law of constant returns


  1. Transfer Earning or Opportunity Cost refers to:

(a) Earning of a factor in next best alternative

(b) Earning of a factor in previous alternative

(c) Earning of a factor in present alternative

(d) Earning of a factor in the coming years


  1. Rent is determined under Modern Theory upon:

(a) The equilibrium of demand & supply of land

(b) The fertility of the land

(c) The scarcity of the land

(d) All of the above


  1. Modern theory of rent has classified factors of production into 2 parts. They are:

(a) Long & short term factors

(b) Specific and non-specific factors

(c) Scarcity of factors & Non-scarcity of factors

(d) None of these


  1. Supply of land according to modern theory is:

(a) Fixed

(b) Limited

(c) Short

(d) Infinite


  1. Formula of rent according to modern theory of rent is:

(a) Rent =  Actual Earning  = Transfer Earning

(b) Rent = Actual Earning  – Transfer Earning

(c) Rent =  Actual Earning   (Transfer Earning)

(d) Rent = Actual Earning  ≥ Transfer Earning


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1. c
3. a
4. a
5. b
6. a
7. a
8. b
9. a
10. b
View Answers





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