Factor Pricing and the Determination of Incomes

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Now that we have developed the theory of how the market price of produced goods and services is determined we can move on to apply the same kind of analysis to explain how the prices of labour and other productive factors are determined. 


  • To show how the forces of supply and demand already explained with reference to product markets work in the same way to determine the prices of productive services -- and the incomes of those who own them.
  • To extend the earlier treatment of land, labour and capital as productive inputs
  • To introduce the concept of Ricardian rent in the context of the historical conflict between land-owners and manufacturers in 19th Century Britain
  • To illustrate the use of Lorenze curves and Gini coefficients to conceptualize and measure differences in the distribution of income in society
  • To introduce some issues of justice and equity in relation to the distribution, and redistribution of income.

Copyright 1999 K.J. Rea