According to the marginal productivity theory of income distribution,every factor of production is paid _____ the equilibrium value of its _____ product.
A)exactly;marginal
B)more than;marginal
C)less than;marginal
D)exactly;average

Question

Quizplus · Accepted Answer

The marginal productivity theory of income distribution states that factors of production are paid exactly the equilibrium value of their marginal product, which is the additional output that is generated by adding one more unit of the factor of production. In other words, the price of a factor of production (e.g. wages for labor) should be equal to the additional output that is produced by hiring one more unit of that factor (e.g. additional units of labor). Therefore, option A is the correct answer.

According to the Marginal Productivity Theory of Income Distribution,every Factor