Economic rent is not rent. Most people think of rent as a
periodic payment for the use of real estate. However, the term
economic rent is used to define a fundamental aspect of any
economy. Economic rent is the revenue that can be earned from
the land or other natural resource for which there is a fixed
supply — as economists like to say, the supply is perfectly
inelastic. Because the supply is perfectly inelastic, the amount
of its supply does not depend on any income that the resource
can produce. Hence, it is a free gift to society. When people
first came to populate a land, the land was there for the taking
— no one produced the land because of their efforts. Hence,
whatever revenue, or rent, can be earned from the land is
unearned by the landowner. For instance, consider 2 farmers, who
each have one acre of land. Each practice farming in exactly the
same way, with the same real capital, but the first farmer can
produce 100 bushels of wheat from that acre, while the 2nd
farmer can only produce 40 bushels