Define Quasi rent

Quasi-rent is a term in economics that refers to the extra earnings generated by a factor of production, such as land, labor, or capital, that exceed its opportunity cost in the short run. This concept is primarily applicable to situations where supply is temporarily fixed and cannot be adjusted to meet changes in demand.

### Key Points:

1. **Short-run Phenomenon:**
   Quasi-rent arises in the short run when the supply of a factor of production cannot be increased due to time constraints. For example, the supply of machinery, buildings, or specialized labor might be fixed in the short term.

2. **Fixed Supply:**
   Since the supply is fixed, an increase in demand leads to higher earnings for the existing factors of production. These additional earnings above the normal expected returns are considered quasi-rent.

3. **Temporary Nature:**
   Quasi-rent is temporary because, in the long run, the supply of the factor can adjust. Once the supply increases to meet demand, the extra earnings or quasi-rent tend to disappear.

### Example:

Imagine a company that owns a specialized machine used in the production of a unique product. If the demand for this product suddenly increases, the machine can generate higher earnings than usual because the company cannot immediately increase the number of machines it operates. The extra profit earned during this period, until more machines can be acquired or produced, is considered quasi-rent.

### Diagram:

To illustrate quasi-rent, consider the following:

- **Y-axis:** Price or Earnings
- **X-axis:** Quantity of Factor of Production

In the short run, the supply curve for the factor of production is perfectly inelastic (vertical), reflecting that the quantity cannot change. An increase in demand shifts the demand curve to the right, resulting in higher prices or earnings.

```
Price/Earnings
|
|          D2
|         / 
|        / 
|-------/------------------- S (short run)
|      /   
|     /D1    
|____/_____________________ Quantity
```

In this diagram:
- **D1 and D2** represent the initial and increased demand curves, respectively.
- **S** represents the short-run supply curve.

The difference in earnings between the initial and new demand levels, shown by the vertical distance between the demand curves at the fixed supply level, represents quasi-rent. 

In summary, quasi-rent is the temporary additional income earned by a factor of production due to fixed supply in the short run when demand increases.