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

Answer 1

this salary differential indicates that Derek Jeter contributes much more to society than does the President of the United States.

Step-by-step explanation:

The marginal productive theory of distribution says that a worker's salary is directly dependent on the total production that he performs, a higher salary indicates a higher marginal revenue product.

From this theory, the persons who contribute the most to the economic development of the company or organization will have the highest salaries. Therefore Derek Jeter contributes much more to society than does the President of the United States because his salary is higher.