PRICING OF FACTORS OF PRODUCTON OR THE THEORY OF DISTRIBUTION

 

This theory deals with the factors of production (rewards for the factors or price of factors) due to the service of these factors in the process of production.

The theory of distribution is, therefore, concerned with the distribution of incomes among the factors of production it describes the amount of income that each factor of production earns after the process of production. It answers the fundamental economic question on who gets what out of the output or income produced.