The theory of distribution deals essentially with the determination of the levels of payment to the various factors of production, i.e., the prices of the economy's productive resources. The theory of income distribution is related to factor pricing. It is a segment of general equilibrium theory, inasmuch as a change in the level of wages, interest rates, or rents has [...]
Economists have developed alternative theories which deal explicitly with problems of macro distribution. There are two alternative theories discussed below: 1. Macro-marginal productivity theories: These theories are based on the postulated existence of a macro-production function for the whole economy of the following type: Q = f (K, L, l) where Q stands for GNP, K for society's stock of [...]
In this article we will discuss about Personal Distribution and Functional Distribution. The term ‘distribution’ in economics refers to personal distribution and functional distribution of income. Personal distribution relates to the forces governing the distribution of income and wealth among the various individuals of a country. Under personal distribution, we study the pattern of the distribution of national income and [...]