Sean is a baseball player who earns $890,000 per year playing for team X. If he weren't playing baseball for team X, he would be playing baseball for team Y and earning $660,000 per year. If he weren't playing baseball at all, he would be working as an accountant earning $90,000 per year. What is his economic rent as a baseball player?

Answer: The answer is given below

Explanation:

Economic rent is a payment to a factor of production that is in excess of the costs which are needed to bring the factor into production. It is the payment in excess of the opportunity cost.

Economic rent = Present opportunity - opportunity cost.

Sean is a baseball player who earns $890,000 per year playing for team X. If he weren't playing baseball for team X, he would be playing baseball for team Y and earning $660,000 per year. His economic rent in this case will be:

Economic rent = Present opportunity - opportunity cost.

= $890,000 - $660,000

= $230,000

If he weren't playing baseball at all, he would be working as an accountant earning $90,000 per year. His economic rent in this case will be:

Economic rent = Present opportunity - opportunity cost.

= $890,000 - $90,000

= $800,000