Answer:
Based on marginal productivity theory, this says that their contributions to society are not equal because society is willing to pay more for Clayton Kershaw and Mike Trout as baseball players than it is willing to pay for the president of the United States.
Explanation:
a) Data and Calculations:
Annual salary of the U.S. president = $400,000
Annual salary of baseball players = $34 million
For each dollar paid to the U.S. president, society is willing to pay a baseball player $85 ($34 million/$400,000)
b) The marginal productivity theory, which considers the contribution made by each factor of production, is based on the following assumptions that:
1) all units of the production factor, for example, labor, are homogeneous.
2) the baseball player can be substituted for the U.S. president.
3) there is perfect mobility of factors, from being a baseball player to being a U.S. president, and vice versa.
