[Solved] Economic rent does not arise when the supply of a factor unit is -

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Q.	Economic rent does not arise when the supply of a factor unit is -
A.	Perfectly inelastic
B.	Perfectly elastic
C.	Relatively elastic
D.	Relatively inelastic
Answer» B. Perfectly elastic
Explanation: Economic rent in the sense of surplus over transfer earnings arise when the supply of the factor units is less than perfectly elastic or not perfectly elastic. When the supply of factor units is perfectly elastic, there is no surplus or economic rent and the actual earnings and transfer earnings are equal. In such a scenario, at a given price or remuneration, the entrepreneur can engage any number of factor units.

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