Illustrate the Ricardian Theory of Rent?

1.	Illustrate the Ricardian Theory of Rent?
Answer» 1. The Classical theory of Rent is called “ Ricardian Theory of Rent.” 2. “ Rent is that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil” – David Ricardo Ricardian theory of rent assumes the following: 1. Land differs in fertility. 2. The law of diminishing returns operates in agriculture. 3. Rent depends upon fertility and location of land. 4. Theory assumes perfect competition. 5. It is based on the assumption of long period. 6. There is existence of marginal land or no – rent land. 7. Land has certain “Original and indestructible powers”. 8. Land is used for cultivation only. 9. Most fertile lands are cultivated first.

Answer»

1. The Classical theory of Rent is called “ Ricardian Theory of Rent.”

2. “ Rent is that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil” – David Ricardo

Ricardian theory of rent assumes the following:

1. Land differs in fertility.

2. The law of diminishing returns operates in agriculture.

3. Rent depends upon fertility and location of land.

4. Theory assumes perfect competition.

5. It is based on the assumption of long period.

6. There is existence of marginal land or no – rent land.

7. Land has certain “Original and indestructible powers”.

8. Land is used for cultivation only.

9. Most fertile lands are cultivated first.

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