Marginal Productivity Theory Implies That in a Perfectly Competitive Market

question 171

Multiple Choice

Marginal productivity theory implies that in a perfectly competitive market economy, a worker will receive income

• A) equal to the value of her marginal contribution to the production process.
• B) that is greater than the value of her marginal contribution to production process.
• C) that is less than the value of her marginal contribution to the production process.
• D) greater than, less than, or equal to the value of her marginal contribution to the production process, depending on her ability to negotiate with employers.

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Definitions:

Selling Price

The amount of money a buyer pays to purchase a product or service.

Absorption Costing

An accounting method that includes both variable and fixed manufacturing overhead costs in the cost of a product.

Cost-plus Pricing

A pricing strategy where the selling price is determined by adding a specific markup to a product's cost.

Return on Investment

A financial metric used to evaluate the efficiency or profitability of an investment, calculated by dividing net profit by the investment's cost.