1. FUNCTIONAL AND PERSONAL DISTRIBUTION
The theory of factor pricing is popularly known as the
theory of distribution. The distribution may be functional or
personal.
The personal distribution of national income or what
is known as size distribution of income means the
distribution of national income among various individuals or
persons of the society. In fact there are great inequalities of
income between various individuals. Thus the theory of
personal distribution studies how personal incomes of
individuals are determined and how the inequalities of income
emerge.
Functional distributional : on the other hand, in the theory of
functional distribution we study how the various factors of
production are reward for their services rendered.
2. In the production process. Hence, in the theory of
functional distribution we study how are the prices
of the land, labour, capital, and organization are
determined. In short, the theory of functional
distribution means the theory of factor pricing.
