1 Define rent according to David Ricardo/ Ricardian rent

David Ricardo, a classical economist, introduced the concept of

rent in his work "Principles of Political Economy and Taxation"
(1817). According to Ricardo, rent is the payment made for the
use of land. He identified three types of rent: differential rent,
absolute rent, and economic rent. The most significant for
Ricardo's theory is differential rent, which arises due to
differences in the fertility of land. As population grows,
cultivation extends to less fertile lands, causing differences in
productivity and creating a surplus, which becomes rent.

2. explain Theory of Rent:**

The Theory of Rent, as developed by David Ricardo, explains
how the rent for land arises. It is based on the law of
diminishing returns, stating that as more resources are applied
to a fixed resource (land), the incremental output will eventually
decrease. This leads to differences in the fertility of land, and
rent emerges as a surplus obtained from the more productive
lands.
3 wage differential What is Wage differential/ what are the
factors influencing
 Wage differential refers to the differences in wages among
different categories of labor or between different industries.
Several factors influence wage differentials, including:
- **Skills and Education:** Higher-skilled or more educated
workers often command higher wages.
- **Occupational Differences:** Wages can vary between
different occupations and industries.
- **Geographic Location:** Wages may differ based on the
cost of living and demand for labor in specific regions.
- **Experience:** More experienced workers might earn
higher wages.
- **Market Conditions:** Supply and demand in the labor
market can impact wages.

4. Explain the classical theory of interest

The classical theory of interest, associated with economists
like Adam Smith and David Ricardo, posits that interest is the
reward for saving and the compensation for waiting. It is
determined by the supply and demand for loanable funds in the
market. According to this theory, interest rates are influenced by
factors such as time preference, productivity of capital, and the
availability of capital.
5 Meaning of the concept of pigou's welfare/ pareto's welfare
- **Pigou's Welfare Economics:** Arthur Pigou, an economist,
contributed to welfare economics. Pigou's welfare economics
focuses on economic policies aimed at achieving economic
welfare. He introduced the concept of externalities, arguing that
government intervention could correct market failures and
improve overall social welfare. Pigou suggested the use of taxes
and subsidies to internalize external costs and benefits.

- **Pareto's Welfare Economics:** Vilfredo Pareto, another

economist, developed the Pareto efficiency criterion. According
to Pareto, an economic change is desirable if it makes at least
one individual better off without making anyone worse off.
Pareto efficiency implies that resources are allocated in the
most efficient way, and no further improvements can be made
without harming someone's well-being. This criterion is a
foundation for judging the efficiency of economic systems and
policies.