Quasi Rent

The term quasi rent is not new to the economists. This is basically an analytical term which is used for the income earned as a result of the opportunity cost after investment. Usually it so happens that the individuals face the loss of cost investment and their payment may be sunk. The amount earned after such a loss is called as the quasi rent. The term of quasi rent is not too old and it was used for the first time by Alfred Marshall. He was the first economist to earn quasi rents.

Economic value of quasi rent

Generally the quasi rent also sometimes referred to as the economic rent is defined as the difference between the incomes obtained from a certain factor of production and the cost of the factor which is used in bringing the production in particular use. There are many applications of quasi rent. Either it is used in bringing the factor of quasi rent into economic use or it can also be applied in using the factor for the purposes of opportunity cost.

Investment of quasi rent

In general the quasi rent is defined as the difference between the income earned as a result of the currently used factor and the minimum cost which is required to draw the quasi factor for a particular use. The value of opportunity income is the most important while practicing the quasi rent. Basically the opportunity cost of income is the current income subtracted by the available income being used in next best factor. This factor is used during the particular use in future. Nowadays there are many examples where the capital investments are made out of the quasi rent cost investments. This usage is recorded in almost all of the specialized or unspecialized capital equipment.

In case of the investment of sunk cost, the amount required to draw the result for an economic usage is minimal. On the other hand the true quasi rent is the income which is in excess and it is also required in order to make the remaining factor much productive. Sometimes the quasi rent may also include the sunk cost investment.