Critics of the marginal productivity theory of income distribution claim that the theory is flawed because of
A)the law of diminishing returns.
B)the existence of imperfect competition, such as of monopoly and monopsony, in output and resource markets.
C)the problem of comparing different kinds of resources, such as capital and labor.
D)government policies that redistribute income.

Question

Quizplus · Accepted Answer

The marginal productivity theory of income distribution is criticized for being flawed due to the existence of imperfect competition, such as monopoly and monopsony, in output and resource markets. This imperfection can distort the distribution of income away from what would be predicted by pure marginal productivity.

Critics of the Marginal Productivity Theory of Income Distribution Claim