Microeconomics Question from Walter E. Williams:[]

The marginal productivity basis of the demand for labor is inapplicable to cases in which the labor is doing research, teaching or in other cases where there is no identifiable measurable product or in situations where there is non-market allocation of services. Evaluate.


Where you have a tangible product, quantifying the marginal product is problematic as you cannot measure he exact contribution of each input to the whole. Where there is no product, but instead a service which is sold on the market, this difficulty remains. How much of the “product/service” of an attorney is contributed by the attorney, the legal references he draws upon, the computer system he uses, etc. Academic research, teaching, etc are all services reflected at some point in the market, as the quality of such is measured and reflected in salaries, grants, etc. The product can be measured through teaching salaries, tenure, publications, etc.

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