Question

a major criticism of marginal productivity theory of income distribution is that
a. the demnad for labour resources is highly inelastic
b.demand for labour is price elastic
c.it produces inequality in income distribution
d.purely comeptitive forms are only interested in profit maximization

if a factor has many close substitute, we would expect that its proce elasticity of demand will be
unity
zero
elastic
inelastic

please explain the right answers properly

Answer 1

Answer : Option C is correct. A major criticism of marginal productivity theory of income distribution is that it produces inequality in income distribution. It means that income is not properly divide because resources are scare and unevenly distrubted among the people of an economy.It means resources are properly utilised and systematic procedure to utilised in an economy.

Answer :Option C is correct. If a factor has many close subsitute than we would expect that price elasticity of demand is elastic. It means that if price of one factor goes up than consumer will subsitute to the another factor which resulted in the decrease in quantity demanded.This shows that small change in price resulted in greater change in Quantity demanded.