According to the _____,in a perfectly competitive economy,each factor of production is paid its equilibrium value of the marginal product.
A) theory of labour supply
B) efficiency-wage model
C) theory of compensating differentials
D) marginal productivity theory of income distribution

Question

Quizplus · Accepted Answer

The marginal productivity theory of income distribution states that in a perfectly competitive economy, each factor of production (such as labor) is paid its equilibrium value of the marginal product. This means that the price of each factor of production will be equal to the value that it adds to the final product, and labor will be paid according to its marginal productivity. Thus, D is the correct choice. The other choices (A, B, C) are not directly related to the concept of the equilibrium value of the marginal product in a perfectly competitive economy.

According to the _____,In a Perfectly Competitive Economy,each Factor of Production