The Neoclassical Theory of Distribution

question 147

Multiple Choice

The neoclassical theory of distribution:

• A) was developed by Karl Marx.
• B) is rejected by most economists today.
• C) shows that the national income of an economy is not equal to total output.
• D) is a theory of how national income is divided among the factors of production.

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Definitions:

Direct Cost

Expenses that can be directly traced to producing specific goods or services, such as raw materials and direct labor.

Indirect Cost

Costs not directly traceable to a specific product or project, such as utilities or rent.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much contributes to covering fixed costs and generating profits.

Direct Manufacturing Cost

Costs that are directly attributable to the production of a specific product, including direct materials and direct labor.