An important assumption underlying the marginal productivity theory of income distribution is that:

A) product markets are monopolistically competitive.
B) factor markets are perfectly competitive.
C) the relevant value of the marginal product is not the equilibrium value.
D) the firm does not own any land or physical capital.

Marginal Productivity

The additional output that can be produced by adding one more unit of a specific input, keeping all other inputs constant.

Perfectly Competitive

A type of market where numerous small firms compete against each other offering products that are virtually interchangeable and where no single company can dictate the market price.