ABSTRACT
The marginal value product determines the price of a unit of a factor of production. The differences in the earnings of the various agents of production reflect differences in efficiency. Equilibrium in the employment of productive factors is again viewed as a balance of opposing forces. In equilibrium every factor unit receives the equivalent of its marginal product, and thus rewards correspond to efficiency. Therefore, the law in its pessimistic application to the whole economy has to be distinguished from its optimistic effects in respect to the action of individual entrepreneurs, factor prices, incomes, and rewards. A. Marshall exaggerates the differences in the allocation of entrepreneurship and of other factors. The maximization is accomplished in the same way as within the individual, through equalization at the margin; the marginal product of a factor will, in equilibrium, have to be equal in all its uses.
