For a factor of production to be available to a firm, the firm must be willing to pay its opportunity cost. For example, if you want to rent a farm to live on, you would have to be willing to pay at least as much as the land is worth to a farmer. If a university wishes to hire a prominent surgeon to head their medical school, they must be willing to pay her enough, or compensate her in other ways, to induce her to leave her practice.
Sometimes a factor of production earns more than its opportunity
cost. Earnings that exceed the minimum necessary to employ a factor
are called Monopoly Rents or Economic Rents or simply Rents.
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