At Hamill Manufacturing of Pennsylvania,highly skilled senior machinists are paid $70,000,excluding benefits,but the average skilled machinist generates approximately $137,000 in value added.This difference is due to the fact that the:
A) marginal productivity theory of income distribution does not apply in this case.
B) equilibrium wage rate includes other costs,such as employee benefits,that have to be subtracted from the $70,000 salary.
C) equilibrium wage rate includes other costs,such as employee benefits,that have to be added to the $70,000 salary.
D) value of the marginal product of the last machinist hired is equal to the average of all machinists employed.
Correct Answer:
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