Question

The marginal productivity theory of resource demand suggests that those resources whose productivity levels are high will end up getting a higher share of the economy's income.
a) true
b) false

Answer 1

Answer: a) true

Explanation:

• Marginal product is a term which is used to represent the raise in amount of production by adding of one unit of factor of production [Taking other factors constant.]

According to marginal productivity theory of resource,

Under a perfect competition, if there is an increase in the marginal productivity of one resource(while taking price level constant) then that resource will be paid a higher wage rate.

This implies that a higher share of the economy's income.

Hence, the given statement is "True".