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(Rent theory)

Consider the following table showing the marginal product in bushels of corn on the only three types of farm plots in cultivation:

Extensive Margin

 

Plot A Plot B Plot C

Intensive Margin

 

Dose 1 of K and L 250 bushels 100 bushels 50 bushels

Dose 2 of K and L 100 bushels 50 bushes

Dose 3 of K and L 50 bushels

 

a.Using Ricardo's approach to rent, what are the expected rents on Plots A, B, and C measured in bushels?

 

b.If the cost of a dose of capital and labour is $25, what would Ricardo expect the price of corn to be?

 

c.Again, if the cost of a dose of capital and labour is $25, what would Ricardo expect the dollar rent on Plot A to be?

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Nusrat Fatima
Nusrat FatimaLv10
28 Sep 2019

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