Oscar's Flower Shop Maximizes Profits by Hiring Four Workers in a Perfectly

Multiple Choice

Oscar's Flower Shop maximizes profits by hiring four workers in a perfectly competitive labor market. The workers and their value of the marginal product of labor are Noe, $40; Barbara, $35; Calvin, $27; and Diana, $15. According to the marginal productivity theory of income distribution, which of the following statements is TRUE?

A) In equilibrium, each worker is paid his or her value of the marginal product of labor.
B) Each worker is paid a wage equal to the highest value of the marginal product of labor .
C) Each worker is paid $15.
D) We need to know the product price before we can figure out the wage rate.