Theory of Rent

Meaning of rent:-

In general, rent is that which is paid to owner of property by the persons who do the usage of his camel.

Types of Rent:-

  1. Total Rent: – Economic rent + interest on capital invested on land, remuneration to land owners for his efforts for land development +projects for risks undertaken by the owner.
  2. Economic Rent: – It is that part of total rent which is paid to the owner for the usage of land.
    Total income reclined from agriculture “ economic Rent = Cost of production
  3. Contract Rent: – The rent which is ascertained by mutual agreement or contract for use of land, between the farmer & the land owner is contract rent.

Theory of Rent

There are two types of theories of land.

  1. Classical or ricardian theory of rent.
  2. Modern theory of rent.
  3. Ricardian theory of rent: – The payment paid to the owner for the usage of original & indestructible wears of solid is rent.
  4. Modern theory of Rent:- The difference between the transfer income received by the factor of production & the actual income is known as rent.

Author – Lalita Soni

 

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