Definition and Meaning of Rent:

The term 'rent' meanings in Economics differ from the ordinary way. In the everyday speech, the term, rent is
applied to the periodic payments made regularly for the hire of a particular asset. For example, the payments
made by a tenant to the owner of a house, or factory or land on weekly, monthly, or yearly basis is a rent in the
popular sense.

In Economics:

"The concept of rent, or to be more precise 'economic rent' is used in a special sense. According to the classical
economists, rent is a price of land. It is a payment made by a tenant farmer to the landlord for the use of
original and durable powers of the soil".

In the words of Boulding:

"Economic rent may be defined as any payment to a unit of production which is in excess of the minimum
amount necessary to keep that factor in its present occupation".

Example:

For example, a typist is ready to work for Rs 26000 per month in a college but he is paid Rs 30000 per month.
This is because of the fact that the market demand for the typists is greater than its supply. So long as the
supply cannot be adjusted to demand the typist will continue earning a payment in excess of Rs 4000 of the
amount which is necessary to keep him in that occupation. This monthly surplus money of Rs 4000 (30000 -
26000= Rs 4000) is an economic rent.

Classical Definitions:

Economic rent is the payment for the use of scarce natural resources. Jacob Oser

Economic rent is that portion of a landlords income which is attributable to his ownership of land. Anatol
Murad.

Rent is the difference between actual payment to a factor and its supply price or transfer earnings. Hibdon

Types of Rent

In Economics, there may be the following types of rent:

Economic Rent It is the payment made for the use of land or payment for the use of scarce natural resources.

Scarcity Rent Scarcity of rent is the main cause of emergence of Rent. Therefore scarcity rent is the price paid
for the use of a homogeneous land when its supply is limited in relation to its demand.

Differential Rent According to Ricardo rent arises due to difference in fertility of land. Thus the surplus
production which arises due to difference in fertility of lands is called differential rent.
Situational Rent It refers to the rent arising out of difference in situation of land i.e. it simply mean that the
lands situated near the markets will have more rent than the land far from markets due to the situation of
land.

Contractual Rent It refers to the amount mutually agreed upon between the owner and the tenant by a
contract. The amount directly depends upon the demand and supply of land in the market.

Gross Rent It is the entire amount that a tenant pays to the owner of a land. It includes:

Economic Rent

Interest on amount invested on land

Reward for risk taken by the landlord

Quasi Rent It refers to the surplus earned by the man-made factors of production whose supply is inelastic or
fixed in the short run but elastic in the long run.