TRANSFER EARNINGS

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TRANSFER EARNINGS  Modem economists make use of the concept of transfer earnings, in order to explain the remuneration of the factors of production. Take the case of a worker. SUPIX)Se in his pre. cnt occupation he is earning Rs, 250. In case, he has to give up that occupation, suppose the next best alternative employment fetches him Rs. 200. This is […]

EQUITY IN INCOME DISTRIBUTION

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EQUITY IN INCOME DISTRIBUTION We have studied above the general them y of incollie distribution. Two questions arise: (oj Is the distribution equitable, fair and just’! (II) Why is there inequality of incomes? The first question is ethical and involves value judgment and docs not admit of any objective measurement. Also, no two opinions agree the other hand. at OW” price. […]

EQUITY IN INCOME DISTRIBUTION

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EQUITY IN INCOME DISTRIBUTION Wc have studied above the general thcory of income distribution. Two questions arise: (oj Is the distribution equitable, fair and just’! (II) Why is there inequality of incomes? The first question is ethical and involves value judgment and docs not admi; of any objective measurement. Also, fill two opinions agree on the criterion of fairness or justice. […]

Equilibrium of Demand and Supply

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Equilibrium of Demand and Supply Now. we have worked our way to the demand curve and the supply curve of a factor of production. Both these curves are needed fur the determination of the price of a. productive service. That price will tend to prevail in the factor market at which the demand and supply are in equilibrium. This equilibrium […]

Supply Side

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Supply Side The supply curve of a factor of production depends on the various conditions governing its supply. Take the case of labour-a very important productive service. The supply of labour depends on the size and composition and geographical distribution. labour efficiency. cost of education and training, costs of movement, the expected income. relative preference for work and leisure. and so on. […]

MODERN THEORY OF DISTRIBUTION

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MODERN THEORY OF DISTRIBUTION The marginal productivity theory, which we have discussed above only tells us how many workers will an employer engage at a given wage-level in order to maximize his profit. It does not tell us how that wage-level is determined. We also saw that the marginal productivity theory approaches the problem of the determination of the reward of a […]

Equilibrium Under Imperfect Competition i ll lite Factor Market

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Equilibrium Under Imperfect Competition ill lite Factor Market Wc have analysed above conditions of equilibrium in a factor market under perfect competition. But wc know that in the real world. perfect competition docs not prevail. The real world  of imperfect competition. Wc shall now see how a firm reaches a state of equilibrium under imperfect competition in respect of the quantity of […]

Conditions of MONOPSONY

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Conditions of MONOPSONY A monopolistic situation, inter alia. may arise in the following ways: (i) Units of a factory may become specialized to a particular use. Having become thus specific, they have no use for other purposes. For example. a   of specialist skill may be developed to meet the requirements of a particular firm and no other firm […]

Equilibrium Under Perfect Competition In The Factor Market

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Equilibrium Under Perfect Competition In The Factor Market When there is perfect competition. an individual firm cannot influence the price of a factor, by buying more or less of it, because its own demand for the factor constitutes a small fraction of the total demand. Consequently, a finn has to accept the price of a factor. say. labor. prevailing in the […]

FIRM’S EQUILIBRIUM IN FACTOR EMPLOYMENT

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FIRM’S EQUILIBRIUM IN FACTOR EMPLOYMENT We have already seen in chapter 19 how a finn achieves equilibrium in regard to a factor combination. A firm will be in equilibrium in this respect when it is combining the various factors of production in such a way that the marginal rate of technical substitution between any two factors is equal to their price ratio. […]