Factor Pricing Theory and Land Rents

Marginal revenue product of input A is the additional revenue produced by an additional unit of input A with other inputs held constant.

Demand for factors of production is a derived demand from demand for goods and services.

Least cost rule

It says costs are minimized when the marginal products per dollar of input are the same across all inputs.

David Ricardo first analyzed the distribution of income among classes.

He wrote, " The produce of earth ... is first divided among three classes of the community; namely, the proprietor of the land, the owner of the...capital necessary for its cultivation, and the laborers by whose industry it is cultivated."

Income Inequality

There is a view that the poor are becoming poorer in modern industrial societies.

The Lorenz curve is a device for measuring the spreads or inequalities of income distribution. It shows the amount of income going to a percentage of population in a cumulative manner.





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Related Web Pages

Entrepreneurship and the Economic Theory of the Firm: Any Gains from Trade? Foss and Klein, 2004

https://mises.org/journals/scholar/klein3.pdf


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References

Paul Samuelson and William D. Nordhaus, Economics, 13th Edition, McGraw-Hill, 1989

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