Asked by Ashley Friend on Jul 19, 2024
Verified
According to the marginal productivity theory of income distribution,if a unit of labor is paid more than a unit of capital,it is because,at the equilibrium quantity of each factor,the value of the marginal product of labor is equal to the value of the marginal product of capital.
Marginal Product
The additional output that is produced as a result of utilizing one more unit of a variable input, holding other inputs constant.
Equilibrium Quantity
The level of goods or services offered and demanded at the price of equilibrium.
Labor
The effort involving both mental and physical capacities of humans utilized in creating goods and services.
- Analyze the relationship between a worker's wage and their marginal product within a competitive factor market.
Verified Answer
CM
Cammie McAnenyJul 19, 2024
Final Answer :
False
Explanation :
According to the marginal productivity theory of income distribution, if a unit of labor is paid more than a unit of capital, it is because the value of the marginal product of labor is higher than the value of the marginal product of capital, not equal, at the equilibrium quantity of each factor.
Learning Objectives
- Analyze the relationship between a worker's wage and their marginal product within a competitive factor market.