Marginal productivity theory implies that in a perfectly competitive market economy, a worker will receive income

Question

Quizplus · Accepted Answer

Marginal productivity theory states that a worker's income will equal the value of their marginal contribution to the production process. In a perfectly competitive market, firms cannot pay workers more than their marginal contribution, as this would reduce profits. Therefore, workers will receive income equal to the value of their marginal contribution.

Marginal Productivity Theory Implies That in a Perfectly Competitive Market