Abstract
How the product is distributed depends upon the rewards the various factors of production receive. We study: (a) the price of the service rendered by a factor; (b) the price of factors of production in a particular industry, occupation or district. The marginal productivity (MP) theory is primarily concerned with the demand for factors. Under perfect competition, an employer will pay the factor a reward equal to the full value of its contribution to the product.
This is a preview of subscription content, log in via an institution to check access.
Copyright information
© 1994 Jack Harvey
About this chapter
Cite this chapter
Harvey, J. (1994). Rewarding the Factors of Production: the Marginal Productivity Theory of Distribution. In: Economics Revision Guide. Palgrave, London. https://doi.org/10.1007/978-1-349-13313-0_13
Download citation
DOI: https://doi.org/10.1007/978-1-349-13313-0_13
Publisher Name: Palgrave, London
Print ISBN: 978-0-333-60195-2
Online ISBN: 978-1-349-13313-0
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)