(i) Normal Profit: Normal Profit refers to the minimum expected return to stay in business. 
(ii) Super Normal Profit: Supe normal profits are over and above the normal profit.
Super Normal Profit = Actual Profit - Normal Profit

(i) In reality, the factors of production are not homogeneous.
(ii) In practice, factors cannot be substituted for each other.
(iii) This theory is applicable only in the long run.

Marginal Productivity of Theory of Distribution

(i) Interest is a payment made by a borrower to the lender for the money borrowed.
(ii) It is the price paid for the use of capital.

(i) Nominal or money wages are the wages paid in terms of money.
(ii) Real wages are the wages paid in terms of goods & services.

Rent is that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil" David Ricardo.

1. Monopoly Profit
2. Windfall Profit
3. Profit as functional reward

(i) The speculative motive relates to the desire of the people to hold cash in order to take advantage of market movements.
(ii) This regarding the future changes in the price of bonds and securities in the capital market.
(iii) The amount saved for this motive depends upon the rate of interest.
(iv) M_s = f(i)
(v) This theory is the inverse relationship between liquidity preference and rate of interest.

(i) According to Schumpeter profit is the reward for innovation.
(ii) Innovation means invention put into commercial practice.
(iii) Innovation may consist of introduction of a new product or a new method of production or opening a new market or discovery of new raw materials or reorganisation of an industry.
(iv) The cost of production decreases and so profit increases.
(v) Innovation should be done continuously.

(i) Wage is equal to the subsistence level of the labourer ie the minimum amount of food, clothing & shelter which workers & their family require for existence
(ii) If workers are paid higher wages than the subsistence level, the workers would be better off & so population increases.
(iii) So wages come down & vice versa.
(iv) So wages should not be above or below the subsistence level of the labourer.

Marginal Productivity Theory of Wage:
(i) The application of a general theory of distribution to wage fixation is the marginal productivity theory of wages.
(ii) According to the theory wages are determined by the marginal productivity of labour and equal to it at the point of equilibrium.
(iii) Under perfect competition, wage is paid equal to marginal product of labour (wage = MPL)
(iv) But in real world where there is imperfect competition, there is exploitation of labour and wage is less than MP_l.

The supply of loanable funds depends upon the following four sources.
(i) Savings (S)
(ii) Bank Credit (BC)
(iii) Dis hoarding (DH)
(iv) Disinvestment (DI)
(i) Savings (S):
1. Supply of loanable funds comes form savings.
2. Savings may be of two types.
They are
(i) "ex-ante savings" and
(ii) "ex-post savings".
(ii) Bank Credit (BC):
1. Commercial banks create credit and supply of loanable funds to the investors.
(iii) Dishoarding (DH):
1. Dishoarding means bringing out the hoarded money into use.
2. It constitutes a source of supply of loanable funds.
(iv) Disinvestment (DI):
1. Disinvestment is the opposite of investment.
2. Not providing sufficient funds for depreciation of equipment.
3. All the four sources of supply of loanable funds vary directly with the interest rate.