ECON 110 Chapter Notes - Chapter 13: Marginal Revenue, Marginal Product, W. M. Keck Observatory

• School: Queen's University
• Department: Economics
• Course: ECON 110
• Professor: Ian James Cromb

Document Summary

Functional distribution of income: the distribution of national income among the major factors of production: labour, capital, and land. Modern economists emphasise the size distribution of income which refers to the distribution of income among individuals, without regard for the source of income. If we want to measure and understand the income inequality between individuals, the size distribution of income is better than the function distribution of income: this is because income classes no longer coincide with social classes. Goods markets and factor markets are closely related: firms" production decisions imply demands for the various factors of production. These demands with the supplies of the factors come together in factor markets. Together they determine the quantities of various factors that are employed, their prices, and the incomes earned by their owners. Firms required the services of land, capital, and labour to be used as inputs. Firms also use the outputs of other firms as their own inputs.