According to the marginal productivity theory of income distribution,if a unit of labor is paid more than a unit of capital,it is because,at the equilibrium quantity of each factor,the value of the _____ product of labor is _____ product of capital.
A)marginal;greater than the marginal
B)marginal;less than the marginal
C)average;greater than the average
D)average;less than the average

Question

Quizplus · Accepted Answer

The marginal productivity theory states that each factor of production (labor and capital) is paid according to its marginal productivity, which refers to the additional output produced by one additional unit of the factor. If one unit of labor is paid more than one unit of capital, it means that the marginal product of labor is greater than the marginal product of capital, indicating that labor is more productive than capital at the margin (i.e. for the last unit of each factor used). Therefore, the correct answer is (A) marginal; greater than the marginal.

According to the Marginal Productivity Theory of Income Distribution,if a Unit