David Ricardo, a nineteenth-century economist, wrote, "The price of corn is high not because a rent is paid, but a rent is paid because the price of the corn is high." Which of the following correctly explains Ricardo's assertion?

Question

Quizplus · Accepted Answer

Ricardo's assertion is based on the principle that the price of corn (or any agricultural product) is determined by market demand and supply, and not directly by the cost of rent. When the price of corn increases due to higher demand, the profitability of growing corn also increases. This, in turn, leads to higher rents as landowners can charge more for land that is now more profitable for farming. Thus, the causality is from corn prices to rents, not the other way around.

David Ricardo, a Nineteenth-Century Economist, Wrote, "The Price of Corn