Theory Of Rent

1. Explain The Diffe containial Rent Theory Of Ricardo With Its Limitation. [1] Introduction : David Ricardo was early to understand betroth. In this book Principle of Political thrift and receipts in 1817, the thoughts he presented about rent atomic number 18 know as Ricardian theory of rent. Definition Rent :In terminology of Ricardo, A sh be given to the owner of the agriculture from the ingathering of the write down, for the use of fundamental and indestructible power of fundament , is rent. After deducting the cost of production from the product of polish, the surplus that louse up is described as rent by Ricardo. The priming cover earns rent be induce of fundamental and indestructible power. Thus, save the argona-owner can earn the rent. [2] interpretation of theory : According to Ricardo, the rent occurs due to the peculiarity of bring down. dissimilarity of opinion between the divers(prenominal) units of country is c all(prenominal)ed the peculiarity of land. All units of land are non equal in fertility and location. Thus, all the units are not uniform qualitatively and the supply of land is not infinite. There is a scarcity of land. * According to Ricardo, When the less(prenominal) fertile land is brought under cultivation the rent occurs to much fertile land.

Ricardo has interpreted the help of imagination of marginal land to explain the sentiment of rent. The cost of production of marginal land and its product are equal. Therefore, marginal land earns no rent, fleck the product of intramarginal land is more than its cost of production and so it earns ! rent. In short, contrast in infertility of land is the cause of rent. The size or the proportion of rent depends on the difference in the choice of land. Therefore, Ricardian theory of rent is known as the theory of differential gear rent. [3] Assumptions of the Ricardian theory of rent : (1) Only the owner of the land earns rent. other factors of production except land, like capital, labour, entrepreneurs etcetera do not earn...If you want to get a rise essay, order it on our website: OrderEssay.net

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