The marginal productivity theory of income distribution suggests that:
A) government should subsidize the most productive workers through a system of transfer payments.
B) each individual should receive income based on his or her contribution to total output.
C) resource owners should receive income based on the idea of "from each according to his ability,to each according to his wants."
D) resource owners should receive income based upon their needs.

Question

Quizplus · Accepted Answer

The marginal productivity theory of income distribution suggests that each individual should receive income based on his or her contribution to total output, which is determined by their marginal productivity. In other words, the more productive an individual is, the more income they should receive. This is based on the idea that workers are paid according to their contribution to output, rather than their needs or wants. Therefore, option B is the best choice. Option A is incorrect because transfer payments are not based on productivity but on need. Option C and D are socialist and redistributionist principles, rather than capitalist ones.

The Marginal Productivity Theory of Income Distribution Suggests That