Rent

Rent is commonly understood as the payment made to the landlord for the use of his land, building or property. In economics, this is actually called contract rent. Contract rent includes interest on capital invested, charges for supervision, profits besides pure land rent. Therefore when we deduct rewards of other factors from the contract rent, what we get is pure land rent or economic rent. Modern economists have generalised the concept of rent. They opine that rent is the payment made for the use of factors of production whose supply is inelastic with land as the main example. Since land is inelastic in supply, landlords are paid rent. If supply of other factors would be inelastic, they would also be paid rent.