What is the marginal productivity theory of income distribution? The marginal pr

Question

What is the marginal productivity theory of income distribution? The marginal productivity theory of income distribution suggests that OA. income is determined by the marginal cost of the factors of production that individuals own. O B. income is determined by the total productivity of the factors of production that individuals own. O C. income is determined by compensating differentials, where higher wages are paid to compensate individuals for unpleasant aspects of a job. D. E. income is determined by economic discrimination, where some workers receive lower wages based on irrelevant characteristics such as race or gender. income is determined by the marginal productivity of the factors of production that individuals own.

Explanation / Answer

1. The right answer is option e. income is determined by the marginal productivity of the factors of production that individuals own.

Explanation: According to the marginal productivity theory of income distribution, the income for a factor of production tends to be equal to the marginal productivity of the factor of production.

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