The marginal productivity theory of income distribution states that
A) income distribution is determined by the marginal productivity of the factors of production that individuals own.
B) as more and more units of labor are added to a fixed quantity of capital, eventually labor's contribution to a firm's income will decrease.
C) factors of production in short supply command higher prices than those available in abundant quantities.
D) capital owners receive the bulk of a nation's income because capital-intensive production generates productivity gains.
A
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In an hour, Sue can produce 40 caps or 4 jackets and Tessa can produce 80 caps or 4 jackets. Who has a comparative advantage in producing caps? If Sue and Tessa specialize and trade, who will gain?
What will be an ideal response?
The difference between price elasticity of demand and income elasticity of demand is that
A) income elasticity of demand examines how an individual's income changes when prices change and the price elasticity of demand examines how quantity demand changes when price changes. B) income elasticity refers to the movement along the demand curve while price elasticity refers to a horizontal shift of the demand curve. C) income elasticity measures the responsiveness of income to changes in supply while price elasticity of demand measures the responsiveness of demand to a change in price. D) income elasticity refers to a horizontal shift of the demand curve while price elasticity of demand refers to a movement along the demand curve.