Question

Those who advocate the marginal productivity theory of income distribution argue that:

1) Income should be distributed equally among all individuals.
2) Income should be distributed based on individual contribution to production.
3) Income should be distributed based on social needs.
4) Income should be distributed based on government regulations.

Answer 1

The marginal productivity theory of income distribution advocates that income should be distributed based on individual contribution to production.

Step-by-step explanation:

Those who advocate the marginal productivity theory of income distribution argue that:

1. Income should be distributed based on individual contribution to production.

The marginal productivity theory of income distribution suggests that individuals should be compensated based on their contribution to the production of goods and services. Those who contribute more to the production process are believed to deserve a larger portion of the income generated. For example, if a worker is more productive and produces more output than their colleagues, they would receive a higher income to reflect their higher contribution.