The Marginal Productivity Theory of Income Distribution States That

question 117

Multiple Choice

The marginal productivity theory of income distribution states that

• A)as more and more units of labour are added to a fixed quantity of capital, eventually labour's contribution to a firm's income will decrease.
• B)income distribution is determined by the marginal productivity of the factors of production that individuals own.
• C)factors of production in short supply command higher prices than those available in abundant quantities.
• D)capital owners receive the bulk of a nation's income because capital-intensive production generates productivity gains.

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Definitions:

Schedule Of Activity

A detailed plan or timetable outlining specific tasks, milestones, or events to be completed within a defined period.

Costs

The amount of money required to purchase goods or services, or the expenses associated with manufacturing a product or providing a service.

Internal Failure Costs

Costs incurred to remedy defects found before the delivery of a product to the customer, such as waste, scrap, and rework.

Activity Costs

Expenses directly associated with specific activities, such as manufacturing, marketing, or research and development.