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:

Marginal Cost Curve

A graph showing how the cost of producing one more unit of a good varies as the quantity of production increases.

Short Run

in economics, refers to a period during which at least one factor of production is fixed, and firms can adjust only the variable factors.

TVC

Total Variable Cost, which refers to all variable expenses that change with the level of output.

Short Run

A period of time in economics during which at least one input is fixed, limiting the ability of the economy or firm to adjust.