Marginal productivity theory implies that a worker will be paid a wage (W)such that

Question

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According to marginal productivity theory, a worker will be paid a wage equal to their marginal revenue product (MRP), which is the additional revenue the worker generates for their employer. This is because if the wage paid is less than the MRP, the employer would be making a profit on the worker's labor and would have an incentive to hire more workers, increasing the demand for labor and driving up wages. Conversely, if the wage paid is more than the MRP, the employer would be losing money on the worker's labor and would have an incentive to lay off workers, decreasing the demand for labor and driving down wages. Therefore, the wage paid would be equal to both the MRP and the value of the worker's marginal product (VMP), which is the additional output the worker generates for their employer. Thus, the correct answer is C: W = MRP and W = VMP.

Marginal Productivity Theory Implies That a Worker Will Be Paid