Economics [ 2 Marks Questions ]

“Quasi rent is the income derived from machines and other appliances made by man QR = Total revenue – Total variable cost

According to Mill, “Every employer will keep a given amount of capital for payment to the workers”. It is known as the “Wage Fund”.

Rent is the difference between the actual earnings of a factor of production and its transfer earnin .

The addition made to the total product by the employment of an additional unit of that factor.

The theory states that price or the reward for any factor of production is equal to the marginal productivity of that factor.

1. VMP – means Value of Marginal Product.
2. The Value of the Marginal Product is obtained by multiplying the Marginal Physical Product of the factor by the price of the product. Symbolically, VMP = MPP x Price.

The theory of factor prices is popularly known as the theory of distribution.