The Theory of Rent

1. The theory of rent, as put forth by Adam Smith, suggests that the difference between the price of land and the price of labour is the rent. 2. Smith argued that the rent of land is determined by the amount of labour and capital required to produce it, as well as the amount of demand for land. 3. The theory of rent suggests that the rent of land is determined by the market conditions, and that the difference between the price of labour and the price of land is the rent. 4. Smith also argued that the rent of land increases with the fertility of the soil and the improvements made to the land. 5. Smith's theory of rent has been influential in the development of modern economics, and is still used today to explain the dynamics of the real estate market.