Rent
Topic: Factors of Production, Entrepreneurship and Startups · NCERT: Class 8, Ch 7 "Factors of Production"
Meaning
Rent is the payment a business makes to use land or property for a period of time instead of buying it. It is the reward for land, one of the four factors of production. It is also called contract rent, because the amount is agreed in a lease or contract. Rents differ because plots differ in fertility and location. A site on a busy road costs more than one in a quiet lane.
Example
Ratna pays a monthly lease to use the site of her restaurant, Pause Point. Over a year, this comes to ₹1.2 lakh, which is her rent.
Don't confuse with
- Economic rent: this is the surplus a factor earns above the minimum needed to keep it in its current use. Any factor can earn it, including a skilled worker. Rent is simply a payment for using land or property.