“Rent is a creation of value, not of wealth”. Who made this observation?

The correct answer is: B. David Ricardo

Ricardo was an English economist who is considered one of the most influential thinkers in the history of economic thought. He is best known for his work on the theory of comparative advantage, which is still taught in economics classes today.

Ricardo also made significant contributions to the theory of rent. He argued that rent is a payment made to the owners of land for the use of their land. He further argued that rent is not a creation of wealth, but rather a transfer of wealth from one group of people (the tenants) to another group of people (the landlords).

The other options are incorrect because:

• Adam Smith was a Scottish economist who is considered the father of modern economics. He is best known for his work on the theory of free markets. Smith did not make the observation that “rent is a creation of value, not of wealth.”
• Alfred Marshall was an English economist who is considered one of the founders of neoclassical economics. He is best known for his work on the theory of general equilibrium. Marshall did not make the observation that “rent is a creation of value, not of wealth.”
• A.C. Pigou was an English economist who is best known for his work on welfare economics. He did not make the observation that “rent is a creation of value, not of wealth.”