Those who advocate the marginal productivity theory of income distribution argue that
A) government policy should be used to redistribute income based on need.
B) family income should be based on a family's demand for products.
C) resource markets will set incomes based on workers' contributions to the output of scarce goods and services.
D) monopoly and monopsony power do not affect resource payments of the overall distribution of income.

Question

Quizplus · Accepted Answer

Advocates of the marginal productivity theory of income distribution believe that in competitive markets, resource markets will determine incomes based on workers' contributions to the production of scarce goods and services. They argue that government policy should not be used to redistribute income based on need, and that family income should not be based on demand for products. However, the theory does not account for the effects of monopoly or monopsony power on resource payments and the distribution of income.

Those Who Advocate the Marginal Productivity Theory of Income Distribution