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22 January, 11:10

According to the marginal productivity theory of income

the income received by an individual who supplies labor services equals the incremental benefit generated to the firm by that individual's labor.

the greater the quantity of resources owned by an individual, the greater his incentive to increase productivity and his income.

the income received by an individual who supplies labor services equals the profit generated to the firm by that individual's labor.

the average income received by an individual who supplies resources is influenced by the resources owner's marginal productivity.

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  1. 22 January, 11:19
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    The income received by an individual who supplies labor services equals the incremental benefit generated to the firm by the individual's labor

    Explanation:

    The marginal productivity theory of income or wages states: firms pay a salary that is equal to the extra benefit a (that is why is marginal; an extra unit in this case is an extra unit of labor) worker represents in output of production. In other words, if the firm employees a new worker, its salary would be equal to the extra output produced by him or her (marginal product of labor). Because of this, wages depend on the production function each firm has. The mathematical formula to get the marginal product of labor is: dF/dL, where F is the production function and L represent labor in it.
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