Marginal productivity theory implies that in a perfectly competitive market economy, a worker will receive income
A) equal to the value of her marginal contribution to the production process.
B) that is greater than the value of her marginal contribution to production process.
C) that is less than the value of her marginal contribution to the production process.
D) greater than, less than, or equal to the value of her marginal contribution to the production process, depending on her ability to negotiate with employers.

Question

Quizplus · Accepted Answer

Marginal productivity theory suggests that in a perfectly competitive market economy, firms will pay their workers a wage equal to the value of their marginal contribution to the production process. This is because in a competitive market, firms have no monopoly power and must pay wages that reflect the productivity of their workers. Therefore, option A is correct. Option B is incorrect because it suggests that workers would be paid more than their productivity, which is not sustainable in a competitive market. Option C is incorrect because it suggests that workers would be paid less than their productivity, which would not attract or retain skilled workers. Option D is incorrect because it suggests that a worker's ability to negotiate with their employer determines their wage, which is not necessarily true in a perfectly competitive market.

Marginal Productivity Theory Implies That in a Perfectly Competitive Market