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| | The Neoclassical Theory of Distribution |
 | | So, in sum, the marginal productivity theorem of distribution says that if all factors are paid their marginal products, then the sum of factor incomes will add up to total product. |
 | | "marginal productivity itself is not an objectively ascertained factor in the pricing problem, but is in fact one of the unknowns in the problem...[A factor's] marginal productivity, then, cannot be defined as anything other than [its] price, for this price represents precisely the contribution of the labour in question to the price of the product. |
 | | They argued that when one re-defines the concept of marginal product in terms of loss, the definition which Carl Menger (1871) had used, then if all factors are paid their marginal product, it will not "add up". |
| cepa.newschool.edu /het/essays/margrev/distrib.htm (9860 words) |
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