Assumptions of the Marginal productivity theory of wages (labour)
- Perfect competition in the labour market.
- Homogenous units of labour employed.
- There is no government intervention in the labour market.
- Employers know the marginal product of their workers
- Labour can measure its marginal product.
- Labour is perfectly mobile
- There is equal bargaining power between the employer and the employees.
- It assumes the law of diminishing returns in the production process.
- It assumes existence of excess capacity in the production process.
CATEGORIES Economics
TAGS Dr. Bbosa Science
