CAS EC 101 Lecture Notes - Lecture 17: Artificial Scarcity, Rent-Seeking, Economic Surplus

• School: Boston University
• Department: Economics
• Course: CAS EC 101
• Professor: Michael Manove

Document Summary

An important function of rents: the payment of economic rents helps guide resources to their most valued use. Expose the best soccer players to the most soccer fans. Rent-seeking: a nonproductive effort to obtain economic rents: economic rents are often generated by the productive use of natural scarce inputs. Ronaldo uses his talent to entertain millions of madrid supporters. Bu students use their intelligence to be productive in their jobs: but sometimes people obtain rents by means of costly nonproductive activities. Manipulating their economic environment: using costly nonproductive activities to obtain economic rents is called rent-seeking, rent-seeking created inefficiency and destroys social surplus. Deal with competing owners who try to block the license. Consumers must pay the higher prices that create economic rents for the owners (and possibly for politicians who take bribes) The limited number of restaurants and high prices reduce their consumption of restaurant food and drink below the competitive equilibrium level.