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A landlord and a tenant farmer collaborate and produce a joint surplus of 80 bushels of corn. The farmer's next best alternative (reservation utility) is to earn 50 bushels working on another farm. If they agree to split the joint surplus equally, the farmer's economic rent from this arrangement is 90 bushels.
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A landlord and a tenant farmer collaborate and produce a joint surplus of 80 bushels of corn. The farmer's next best alternative (reservation utility) is to earn 50 bushels working on another farm. If they agree to split the joint surplus equally, the farmer's economic rent from this arrangement is 90 bushels.