Answer:
C) $50,000,000
Explanation:
The aggregate rent is the surplus earned by the lawyers for operating over their cost at this market equilibrium.
In the picture attached, the rent is showed graphically.
At PL=$250 per hour, the amount of demanded hours is QL=1,000,000.
The oportunity cost at a zero hours level is PL(0)=$150.
The rent can be calculated as:
[tex]Rent=\frac{QL_{equil} x (PL_{equil}-PL_0)}{2}\\\\\\Rent=\frac{1,000,000*(250-150)}{2}= \frac{1,000,000*(100)}{2}=50,000,000[/tex]
The aggregate rent is $50,000,000.
Answer:
The correct answer is option (C) $50,000,000
Explanation:
Given Data:
PL = 150 + 0.0001QL
Pl = price of legal service
QL = number of hours in legal service
Equilibrium price of legal service = $250/hr
Economic rent earn = ?
From the equation given,
PL = 150 + 0.0001QL
when PL₁ = $250, we substitute to get the value of QL₁
QL₁ = (PL₁ - 150)/0.0001
= (250-150)/0.0001
= 100/0.0001
= 1,000,000
At Zero hour, QL₀ = 0
Therefore, Pl₀ = 150 + 0.0001QL₀
= 150 + 0.0001 * 0
= 150+ 0
= $150
For calculating the aggregate economic rent, we use the formula;
Rent = [QL₁* (PL₁-pL₀)]/2
Substituting into the equation, we have
Rent = [1,000,000 * (250-150)]/2
= ( 1000000*100)/2
= 100,000,000/2
=$50,000,000
