Quasi rent is an important concept in economics, especially for agriculture and veterinary students trying to understand how factor earnings behave in the short run. It refers to the temporary earnings received from man-made capital equipment such as machinery, tools, and buildings when their supply cannot immediately adjust to changes in demand. Because these resources cannot be increased instantly, their short-run supply becomes inelastic, creating a temporary surplus for their owners.
According to Alfred Marshall, quasi rent is purely a short-run phenomenon. When the demand for machinery or equipment rises suddenly, the owners enjoy higher earnings. But as the supply of this equipment increases over time, these surplus earnings slowly disappear. This temporary nature is what makes quasi rent different from other long-term factor payments.
In simple terms, quasi rent is the excess of the total revenue earned in the short run over and above the total variable cost. It highlights the gap between what a producer earns and what they must pay to keep the equipment running in the short run. The general expression is:
Quasi Rent = Total Revenue Earned – Total Variable Costs.
This makes quasi rent particularly important for understanding how firms make decisions when market conditions change rapidly.
A common question among students is how quasi rent differs from Ricardian rent. Ricardian rent is the payment made for the use of land, which is naturally fixed in supply. Because land cannot be produced or expanded, its rent exists both in the short run and long run. In contrast, quasi rent is earned from man-made assets such as buildings or machinery. Since these can be produced and supplied in the long run, their earnings are only temporary. Once new equipment enters the market, the extra earnings vanish.
Understanding quasi rent is important for agricultural economics because farmers often rely on capital equipment that cannot be replaced immediately. During times of high demand—for example, peak harvesting season—the returns to existing machinery may rise temporarily. This helps explain short-run cost variations and the behavior of profits in agricultural firms.
Quasi rent is therefore a short-run economic reward arising from inelastic supply and increased demand. It is temporary, demand-driven, and applies only to man-made capital assets. Recognizing this helps students clearly differentiate it from Ricardian rent and understand how factor payments operate in different time frames.
If you’re building a deeper understanding of agricultural economics, explore related concepts and practical examples on Pedigogy’s resource hub. Our goal is to make economics simple, structured, and exam-ready for all agriculture and veterinary students. You can find the full course here:  Visit our Economics section here.
Updated on November 14, 2025
