OFRE S17: David Ricardo and How Rents are Determined

In this show we talk about David Ricardo's law of rents. And we examine how rent prices are set. Have you ever heard a business owner blame a price increase for their goods or services on increases in the cost of rent? Did you ever wonder if the price of a movie ticket went up because the theater’s rent went up? Or do you think perhaps the rent when up in response to rises in the price of movie tickets? Which one is it? Is it possible to know? It turns out there is an answer and it was discovered by David Ricardo (1772-1823) British Parliamentarian/political economist and laid out in his most famous work Principles of Political Economy and Taxation (1817) Ricardian fields example.