Large disparities in wages are often used as:
A)evidence of the importance of profit maximization.
B)a means to question the validity of the marginal productivity theory of income distribution.
C)evidence of diminishing returns.
D)evidence to illustrate the absence of market failures in factor markets.

Question

Quizplus · Accepted Answer

Large disparities in wages suggest that the marginal productivity theory of income distribution may not fully explain the variations in wages. This theory suggests that individuals are paid according to their marginal contribution to production, but large disparities in wages may suggest that other factors, such as discrimination or unequal bargaining power, are impacting wage distribution.

Large Disparities in Wages Are Often Used As