Answer to Question #258623 in Microeconomics for West

Question

Discuss the main features of the Ricardian Theory of Rent. How do these contrast with the Modern Theory of Rent?

Answer 1

Main features of Ricardian theory of rent include;

1. The Law of Diminishing Returns:

This theory tends to assume diminishing returns law is based on agriculture. It claims that the Rate at which capital and labour increases is not the same as for the case of output.

2. Population increase

A nation's population continuously increases, which contributes to production of agriculture in feeding the bigger population.