Question

The President of the United States receives an annual salary of $400,000. Derek Jeter, shortstop for the New York Yankees, receives an annual salary of $23.2 million. Based on the marginal productivity theory of distribution and assuming these markets are competitive, this salary differential indicates that Question 1 options:
Derek Jeter contributes much more to society than does the President of the United States
the President of the United States contributes much more to society than does Derek
Jeter Derek Jeter and the President of the United States make equal contributions to society

Answer 1

Answer:

Based on the marginal productivity theory of distribution and assuming these markets are competitive, this salary differential indicates that Derek Jeter contributes much more to society than does the President of the United States .

Explanation:

This theory establishes that a worker's salary depends directly on the total production that he performs, that is, on the marginal increase in productivity that his work implies for the company or organization in which he develops. Then, according to this theory, the people who contribute the most to the economic development of the company or organization will have the highest salaries.

Obviously, this theory does not contemplate factors external to production, such as advertising, production costs, or even jobs of a social nature that do not generate marketable products.