State and explain marginal productivity theory of distribution.
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the marginal productivity theory of distribution provides a general explanation of how the price (of the earnings) of a factor of production is determined.
According to this theory, the price (or the earnings) of a factor tends to equal the value of its marginal product. Thus, rent is equal to the value of the marginal product (VMP) of land; wages are equal to the VMP of labour and so on.
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