The marginal product of a factor is expressed as MPP, VMP and MRP.
(1) Marginal Physical Product (MPP)
The Marginal Physical Product of a factor is the increment in the total product obtained by the employment of an additional unit of that factor.
(2) Value of Marginal Product (VMP)
The Value of Marginal Product is obtained by multiplying the Marginal Physical Product of the factor by the price of product. Symbolically
VMP = MPP x Price
(3) Marginal Revenue Product (MRP)
The Marginal Revenue Product of a factor is the increment in the total revenue which is obtained by the employment of an additional unit of that factor,
MRP = MPP x MR

Introduction:
Uncertainty theory was propounded by the American Economist Frant H. Knight. To him, profit is the reward for "uncertainty bearing". He distinguishes between "Insurable" and "Noninsurable" risks.
Insurable Risks:
Certain risks are measurable (or) calculable. Some of the examples of these risks are the;
i) The risk of fire.
ii) Theft and
iii) Natural disasters.
Hence they are insurable. Such risks are compensated by the Insurance companies.
Non-Insurable Risks:
There are some risks which are immeasurable (or) incalculable. The probability of their occurrence cannot be anticipated because of the presence of uncertainty in them. Some of the examples of these risks are;
i) Competition.
ii) Market condition.
iii) Technology change and
iv) Public policy.
No insurance company can undertake these risks. Hence they are non-insurable.
According to Knight, profit does not arise on account of risk taking, because the entrepreneur can guard himself against a risk by taking a suitable insurance policy.
When an entrepreneur takes himself the burden of facing an uncertain event, he secure remuneration. That remuneration is "profit".

Wage: Wage is the price paid to the labourer for the services rendered.
Wage Find Theory of Wages:
This theory was first prepounded by Adam Smith. But the credit goes to J.S. Mill who perfected this theory.
According to Mill, "every employer will keep a given amount of capital for payment to the workers". It is also known as "wage fund". It is fixed and constant. Wage depends directly up on the fund and labourers employed. The average wage of a worker can be calculated by using the formula.
Average wage per worker \(=\frac { Total \ Wage \ Fund }{ Number \ of\ Workers } \)
Criticisms:
i) It does not explain the difference in wages in different occupations.
ii) It ignores the role of Trade Unions.
iii) Actually the capitalists will take away a large sum before making payment of wages.

Insurable Risks :
Certain risks are measurable or calculable. Some of the examples of these risks are the risk of fire, theft and natural disasters. Hence they are insurable.
Non - Insurable Risks :
There are some risks which are immeasurable or incalulable. The probability of their occurrence cannot be anticipated because of the presence of uncertainty in them. Some of the examples of these risks are competition market condition, technology change and public policy. No Insurance Company can undertake these risks. Hence, they are non - insurable.

The factor pricing under imperfect competition can be explained with the help of the following diagram.

Explanations:
(i) AFC - Average Factor Cost curve.
(ii) MFC - Marginal Factor Cost curve.
(iii) As AC rises, MC lies above AC.
(iv) It represents the marginal cost paid to the factors.
(v) AFC represents the price paid to the factors. It increases as the number of factors demanded by the employer increases.
(vi) At the point Q, MC = MRP
(vii) The employer attains his maximum profit and so he stops the employment of the factors at the point.
(viii) The average cost paid is NR (OS) and the average revenue obtained is NQ (OP).
(ix) Exploitation per unit of the factor is RQ.
(x) The total number of factors is ON (SR).
(xi) The total exploitation factor by the employer is RQ x SR = "PQRS" (Shaded area).
(xii) Thus, under imperfect competition, factor IS exploited at the equilibrium position.