Allied Schools California Real Estate Practice Test

Economic Rent refers to the rental amount a property would earn under what condition?

Market-determined rent Contract rent Government rent Tax-based rent

Correct Answer:

Market-determined rent

Explanation:

Economic rent is the amount a property would command in a competitive, market-driven rental environment. It reflects what the space could earn under current demand and supply, determined by the market rather than by a fixed contract or government rules. Contract rents are set by lease terms and can diverge from market rents, while government- or tax-based rents are distorted by policy or fiscal factors. So the rent that would be achieved under open market conditions—market-determined rent—best represents economic rent.

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