The Marginal Productivity Theory of Income Distribution Has Been Criticized

question 120

Multiple Choice

The marginal productivity theory of income distribution has been criticized because

• A)the resulting distribution of income is likely to be too equal to maintain production incentives.
• B)income from inherited property is inconsistent with the theory.
• C)purely competitive conditions characterize most resource markets.
• D)it fails to recognize that resource demand is derived from product demand.

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Definitions:

Common Fixed Expenses

These are fixed costs that are not directly tied to production levels, such as salaries, rent, and insurance, which are shared across different segments of a business.

Break-Even

The point at which total costs and total revenues are equal, meaning that a business or product is neither making a profit nor sustaining a loss.

Sales Dollars

The total revenue generated from the sale of goods or services by a company before any expenses are deducted.

Common Fixed Expenses

Costs that do not change with the level of output or sales, shared across different sections or products of a business.