Which economic theory supports the idea that differences in worker output lead to varying wages?

Prepare for the Rutgers Introduction to Microeconomics Test. Study with comprehensive multiple-choice questions and detailed explanations. Master key economic concepts and excel in your exam!

The correct choice is marginal productivity theory, which directly addresses the concept that differences in worker output can lead to variations in wages. This theory posits that a worker's wage is determined by the additional value or output that they contribute to the production process, known as their marginal product. Essentially, if a worker can produce more than another, their productivity justifies a higher wage because they generate greater profits for the employer.

In a competitive labor market, employers will pay workers based on their productivity levels. If a worker’s marginal product increases due to better skills or more efficient work processes, that worker can command a higher wage. This aligns with the broader economic principle that resources (including labor) are allocated based on their contributions to overall production.

Other theories mentioned, such as Keynesian economics and behavioral economics, focus on different aspects of economics, like aggregate demand or psychological factors influencing economic decisions, rather than directly linking wage differences to individual productivity. Similarly, comparative advantage theory is primarily concerned with the benefits of trade and specialization between different economic agents rather than the wage-setting process in labor markets. Thus, marginal productivity theory stands out as the one that specifically explains how variations in individual worker output can lead to differences in wages.

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