The marginal productivity theory applies in a

  • A unionized labour market
  • B perfectly competitive market
  • C monopsonistic market only
  • D monopolistic market only
jamb 2006economics

The correct answer is B. perfectly competitive market

The marginal productivity theory states that under perfect competition, the price of each factor of production will be equal to its marginal productivity.

 Marginal productivity refers to the extra output, return, or profit yielded per unit by advantages from production inputs.

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