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MARGINAL PRODUCTIVITY THEORY: A theory used to analyze the profit-maximizing quantity of inputs (that is, the services of factor of productions) purchased by a firm in the production of its output. Marginal productivity theory indicates that the demand for a factor of production input is based on the marginal product of the factor and the price of the output produced by the factor.

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PERSONAL TAXES

The common term for the portion of personal income used to pay personal tax and nontax payments. Personal tax and nontax payments is the official item in the National Income and Product Accounts maintained by the Bureau of Economics Analysis measuring the personal income taxes paid to the government sector on personal income received by the household sector. Personal tax and nontax payments are subtracted from personal income (PI) to calculate disposable income (DI). Personal tax and nontax payments are about 15 percent of personal income and about 13 percent of gross domestic product.

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