Theory of Distribution or Pricing of Factors of Production

Introduction Theory of Distribution

The Theory of Distribution also known as Pricing of Factors of Production. The theory deals with the determination of the reward of the four factors of production i.e. land, labour, capital and organization. It is the analysis of how and in what manner the reward payments of the factors of production are determined. It is in other words the distribution of national income among land, labour, capital and organization as a reward for their services. This distribution is made on functional basis not personal basis. The land must get its rent, labour its wages, capital its interest and entrepreneur its profit.

The Marginal Productivity Theory (The Classical Theory of Distribution)

1. Introduction
2. Assumptions & the Theory
3. Explanation by Table & Diagram
4. Condition for Equilibrium
5. Criticism & Conclusion

The Modern Theory of Pricing of Factors of Production

1. Introduction
2. Demand for and Supply of a Factor
3. Determination of Market Price
4. Criticism

Rent

1. Meaning and Types of Rent
2. Ricardian Theory of Rent
3. Modem Theory of Rent
4. Differential Rent and Quasi Rent

Wages

1. Introduction, Definition & Kinds of Wages
2. Determinants of Real Wages & Systems of Wage Payment
3. The Marginal Productivity Theory & the Modern Theory of Wages
4. Trade Unions, Concept Minimum Wages & Low Wages in Pakistan

Interest

1. Introduction, Definition and Kinds of Interest
2. Why Interest is Paid?
3. The Demand and Supply Theory of Interest
4. The Loanable Fund Theory of Interest
5. The Liquidity Preference Theory & Liquidity Trap
6. The Concept of Zero Interest rate

Profit

1. Definition and Kinds of Profit
2. Different Theories of Profit and Causes of Different in Profit