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Difference between contract rent and economic rent

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Difference between contract rent and economic rent

Difference between the contract rent and economic rent:-

S. N.
Basis of difference
Contract rent
Economic rent
1.
Definition
It is the total payment made to the factor owner by the renter according to their mutual agreement.
It is the part of contract rent which is paid to the owner for the use of factor.
2.
Constituents
It consists of economic rent, interest on capital invested in a land like the building, fences, drainage, parking slot.
It does not consist of any other payments.
3.
Source
It can be obtained from all grades of land.
It cannot be obtained from the marginal land.
4.
Change in price
The change in the price of the product does not affect the contract rent.
The change in the price of the product influences the economic rent.
5.
Inclusion of price and cost.
It is included in the price as it is included in the cost of production.
It is not included in the price because it is not included in the cost of production.
6.
Determination
It depends on the demand and supply of land.
It depends on the total product of the land.

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