The marginal productivity theory of distribution holds that
A)each factor is paid what it deserves.
B)the owner of each factor is paid the amount that the factor contributes to earnings.
C)each factor's income depends on how hard it works.
D)each factor receives an equal share of the revenue from production.

Question

Quizplus · Accepted Answer

The marginal productivity theory of distribution states that each factor of production (such as labor or capital) is paid according to the amount it contributes to the overall output or earnings of the business. This means that factors that are more productive will earn higher wages or returns, while factors that are less productive will earn less. Therefore, choice B - the owner of each factor is paid the amount that the factor contributes to earnings - is the correct answer.

The Marginal Productivity Theory of Distribution Holds That