Question

4.Assume that more corn is needed because population increases as time passes. Does the share of total output received by landlords increase, decrease, or remain the same as population increases? Explain your answer.

5.Does the share of total output (or income) received by owners of capital increase, decrease, or remain the same as population increases? Explain your answers.

6. According to Ricardo, will the rate of profit on the poorest grade of farmed land be lower than the rate of profit on the most fertile land? Why or why not? Explain your answer.

7. According to Ricardo, can the rate of profit be higher in the manufacturing sector than in the agricultural sector of an economy? Why or why not? Explain your answer

Answer 1

Answer 4;

As the population of the economy increases, the share of the total output received by the landlords increases. This is because increase in the total output will increase the share of the total output going to the landlord as overall increase in national output also increases the share of the output going to the factors of production.

Answer 5:

Increase in the total output will increase production of corn and thus increase the share of the output received by the owners of capital.

Answer 6:

Yes, the rate of profit on the poorest grade of the farmer land will be lower than the rate of profit on the most fertile land because fertile land will be able to produce more corn and increase in production also increases the profits of the firm. In comparison to the less fertile land, the rate of profit will be less as total output that will be produced will be less in comparison to the fertile land and thus profits decline.

Answer 7:

No, the Ricardo model did not state that the rate of profit will be higher in the manufacturing sector than in the agricultural sector of the economy.