Answer to Question #295677 in Management for Madhu

Question

Discuss the relevance of marginal revenue

productivity theory in wage determination within contemporary, real￾world labour markets.

Answer 1

As applied to wages, the marginal-productivity theory states that employers will tend to employ workers of a given type until the contribution that the last (marginal) worker makes to the total value of the product is equal to the extra cost incurred by the hiring of one more worker.