THE GENERAL THEORY OF FACTOR. PRICING

Significance of Factor Pricing
The paid by businessmen to the various factors of production in the form rages, interest, etc., are a major determinant of money incomes. Thus, resource prices playa crucial role in determining the distribution of income households supply the human and property resources and get return. actor prices serve as a rationing device for the utilisation of the producti ce These resources are allocated among various industries and firm through the of factor prices. These prices facilitate the shifting of resources from the causes to the more profitable ones. Dynamic societies cannot function lifting, point of view of the firms, the resource prices enable the application to the most economical or least cost combination of factors. To the firms are costs and these costs must be minimised in order to mal irnise profits since resource prices constitute incomes for the various sections of the important consideration is the attainment of equality of incomes. This trend modem societies highlights the ethical and political significance of factor prices of factor pricing is also called theory of distribution.