Quick Answer: What Is Macro Theory Of Distribution?

What is modern theory of distribution?

The modern theory of factor pricing provides a satisfactory explanation of the problem of distribution.

It is known as the demand and supply theory of distribution.

Prices paid for productive services are like any other price and they are basically determined by demand and supply conditions..

What is modern theory of wages?

According to the modern theory of wages, wages are the price of services rendered by a labor to the employer. As products the prices are determined with the help of demand and supply curve. Similarly, the wages (prices of services rendered by labor) is also obtained with the help of demand and supply of labor.

What is the meaning of marginal?

Use the word marginal when something is minimal or barely enough. … These are the figurative uses for marginal, which comes from the Latin word margo “edge.” Literally, the word is used with things on a border. When you scribble words in the blank edges of your textbook pages, those notes are marginal.

What is Keynesian theory of investment?

According to Keynes investment decisions are taken by comparing the marginal efficiency of capital (MEC) or the yield with the real rate of interest (r). … However, as more and more capital is used in the production process, the MEC will fall due to diminishing marginal product of capital.

Who gave the theory of distribution?

Prof. Seligman4. According to Prof. Seligman – “All wealth that is created in society finds its way to the final disposition of the individual, through certain channels or sources of income, this process is called distribution.” Thus, the theory of distribution deals with the distribution of income.

What is theory of distribution?

Distribution theory, in economics, the systematic attempt to account for the sharing of the national income among the owners of the factors of production—land, labour, and capital. Traditionally, economists have studied how the costs of these factors and the size of their return—rent, wages, and profits—are fixed.

What do you mean by marginal productivity theory of distribution?

The Marginal Productivity Theory of Distribution (MPTD) claims that in a free-market economy the demand for a factor of production will depend upon its marginal product – where “marginal product” is defined as the change in total product that is caused by, or that follows, the addition or subtraction of the marginal …

What is the meaning of distribution in economics?

In economics, distribution is the way total output, income, or wealth is distributed among individuals or among the factors of production (such as labour, land, and capital). In general theory and the national income and product accounts, each unit of output corresponds to a unit of income.

What is the neoclassical theory of distribution?

The basic idea in neoclassical distribution theory is that incomes are earned in the production of goods and services and that the value of the productive factor reflects its contribution to the total product.

What is the basic concept of Marxian theory of distribution?

This theory treats the value of labor-power as an independently determined variable to which the profit rate, real wage, and rate of accumulation must adjust. … Distribution must accommodate the needs of accumulation. This theory, while in many ways the most interesting, is the least well developed by Marx.

What is meant by distribution?

Definition: Distribution means to spread the product throughout the marketplace such that a large number of people can buy it. Distribution involves doing the following things: Tracking the places where the product can be placed such that there is a maximum opportunity to buy it. …

What is productivity theory?

As applied to wages, the marginal-productivity theory holds that employers will tend to hire workers of a particular type until the contribution that the last (marginal) worker makes to the total value of the product is equal to the extra cost incurred by the hiring of one more worker.