Marginal Productivity Theory : What Does it Explain – Distribution or Employment?

Authors

  •   Ketan K. Shah Assistant Professor, New L J Commerce College, Near Sanand Circle, S. G. Road, Ahmedabad - 382 210, Gujarat

DOI:

https://doi.org/10.17010/aijer/2016/v5i4/100770

Keywords:

Theory of Distribution

, Marginal Productivity, Factor Prices, Perfect Competition

A20

, D00, D33

Paper Submission Date

, January 11, 2016, Paper sent back for Revision, July 6, Paper Acceptance Date, July 28, 2016.

Abstract

Marginal productivity theory occupies a prime and significant place in the section on distribution in almost all microeconomics textbooks, explaining the determination of factor prices. In fact, historically and logically, it stands as the tallest theory in this group. This paper tried to examine the validity of marginal productivity theory as the theory of distribution. After a series of logical arguments advanced herein, I came to a conclusion that marginal productivity theory explains employment at the micro as well as macro levels, but fails to provide a satisfactory answer to the question of factor pricing.

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Published

2016-08-01

How to Cite

Shah, K. K. (2016). Marginal Productivity Theory : What Does it Explain – Distribution or Employment?. Arthshastra Indian Journal of Economics & Research, 5(4), 20–26. https://doi.org/10.17010/aijer/2016/v5i4/100770

Issue

Volume 5, Issue 4, July-August 2016

Section

Microeconomics
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