Law of Rent - Increased Production Causing Increased Price: An Example

Increased Production Causing Increased Price: An Example

Ricardo's theory results in one counterintuitive result: with scarce resources, like land, an increase in the amount produced can actually cause the price of that good to increase.

To illustrate, consider wheat farmers outside of London (numbers are made up, and are not historically accurate, for clarity). Say there are three types of land outside of London in 1759 that can be used to make wheat:

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