Marginal Productivity Theory and Condition for Equilibrium The Marginal Productivity Theory is based on the operation of the Law of Diminishing Returns. As we employ more and more of a factor in the production of a commodity, returns from its fall. We shall therefore employ a …
The most important points for its criticism are the following Value of Marginal Productivity According to this theory the entrepreneur or owner of a firm can measure the value of marginal productivity of factors of production, and thus he can try to equate it with the …
The Marginal Productivity Theory explains the basis of awarding the factors of production their rewards. Many economists worked in development of this theory like David Ricardo, Alfred Marshall, Barone, J.B. Clark and Walras. Now the final work on this theory is attributed to the Neo-Classical School …