Questions: There are two main objections to the marginal productivity theory of income distribution. Select an option

The answer is not directly provided as this is not a multiple-choice question.

The marginal productivity theory of income distribution suggests that each factor of production, such as labor or capital, is paid according to its marginal contribution to the production process. However, there are two main objections to this theory:

1. Imperfect Competition: The theory assumes perfect competition in the markets, which is rarely the case in reality. In many markets, firms have some degree of market power, which allows them to set prices above marginal cost. This can lead to income distribution that does not reflect the true marginal productivity of the factors involved. For example, a monopolist might pay workers less than their marginal productivity because there are fewer alternative employment opportunities.

2. Measurement and Attribution Issues: It is often difficult to accurately measure the marginal productivity of individual factors, especially in complex production processes where inputs are interdependent. Additionally, the theory assumes that all factors are paid their marginal product, but in practice, factors like bargaining power, institutional settings, and historical factors can influence income distribution. For instance, a highly skilled worker might be paid less than their marginal productivity due to lack of bargaining power or union representation.

These objections highlight the limitations of the marginal productivity theory in explaining real-world income distribution, suggesting that other factors also play significant roles.