Quasi-rent

Quasi-rent is an economics term that describes earnings of capital, which is fixed in supply in the short run. It refers to the excess made in the short run by a firm from the differences between the selling price and the prime cost of the product.

For example; suppose a company makes spoons at a cost of 10 pence in labour and raw materials, then it can sell them at 40 pence. A quasi rent of 30 pence is earned. This is not a profit to the company because there are fixed costs of inputs which have to be covered by sales, even they do not add to the cost of making more spoons. Even a loss making firm can earn quasi rents.

Quasi rent differs from economic rent in that it is a temporary phenomenon. It can exist because in the short run firms do not have the time to enter or exit an industry and have sunk costs and barriers to exit.

Alfred Marshall (1842-1924) was the first to observe quasi rents.