DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : G.M. Lakshmi
Designation : Lecturer in CCP Section
Branch : Commercial and Computer
Section
Institute : Govt. Polytechnic for women.
Semester : VI semester
Subject : Business Economics-II
subject code :CCP-602
Major topic : Definition of Rent and Theories

of Rent
Sub topic : Meaning of rent
Duration : 50 minutes
Teaching aids : PPT, Animation
CCP602.2 1
Objectives:

On completion of this period, you would be able to

know :

 The meaning of rent

CCP602.2 2
Recap

In the previous class, you have learnt

 The meaning of distribution

 Various types of distribution

CCP602.2 3
In general sense ‘rent’ refers to

Compensation for the use of somebody’s

belongings for a period of time

Eg.

 Rent paid by a tenant to a landlord

 Rent paid for a car, computer etc.,

CCP602.2 4
Types of Rent
 Contractual Rent

 Economic Rent

CCP602.2 5
Contractual Rent

 It is a periodic payment made for use of something

 It is a payment paid per unit of time

 It is paid for things which are hired rather than purchased

 It is gross rent and includes economic or pure rent

Eg.Rent of a house,VCR, etc.,

CCP602.2 6
Economic Rent

 In economics rent refers to Economic Rent

 It is a differential surplus
 It is a difference between the yield of super
marginal land and marginal land

CCP602.2 7
 Contd.,

 It is the excess of payment made to a factor over and

above what is necessary to keep it in its present activity

 It is the difference between the revenue and cost of

cultivation

CCP602.2 8
Summary
 Rent is the payment made for using somebody’s
belongings

 Contractual rent is the payment made for anything hired

 Economic rent or pure rent is the difference between the

yield of super marginal land and marginal land

CCP602.2 9
Quiz
1.Rent is the reward for ___________
2.Economic rent is the same as __________

Answer : 1. land
2. pure rent

CCP602.2 10
Frequently asked questions
1. Define the term ‘Rent’
2. Explain the term ‘contractual rent’ and ‘economic rent’

CCP602.2 11
CCP602.2 12