When each factor is paid an amount equal to the value of the marginal product of the last unit of that factor employed in the factor market as a whole, this is referred to as:
A)the marginal productivity theory of income distribution.
B)diminishing marginal product.
C)the factor distribution of income.
D)the efficiency wage model.

Question

Quizplus · Accepted Answer

The scenario described in the question is exactly what the marginal productivity theory of income distribution proposes - that each factor of production (such as labor) should be paid an amount equal to the value of the last unit of that factor used in production. Therefore, choice letter A is the correct answer.

When Each Factor Is Paid an Amount Equal to the Value