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In classical economics, three factors of production were recognized: labor, capital and land. Wages were defined as the portion of production that went to the workers for their contributions of labor to production; interest was the portion that went to the owners of tools, buildings, etc. for their contributions of capital to production; and rent was the portion that went to landowners for not blocking production on the land they controlled. David Ricardo is credited with the first clear and comprehensive analysis of land rent and the associated economic relationships, and his conclusions have long been accepted by all competent economists.Economic rent is distinct from economic profit, which is the difference between a firm's revenues and the opportunity cost of its inputs. The term "economic profit" does not seek to clarify income from Wages, interest and rent. Real business enterprises typically own some of the factors of production, which they use to produce goods and services for sale, meaning that the business enterprise receives the income due to those factors of production. While payments for and income from owned or controlled factors could be imputed in calculating profit, the common-sense idea of a highly profitable firm is typically a firm which realizes a high rent in the use of those factors it owns or controls: a farm that owns highly productive farmland or a merchant who owns a highly productive retail location might be thought "profitable" in the common sense of the term "profit," because the firm is receiving a large rent on the factor of production it owns.
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