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Assumptions of Marginal Productivity Theory:

The assumptions of marginal productivity theory are as follows:

i. Perfect competition in product market:

Refers to one of the main assumptions of marginal productivity theory. In marginal productivity theory, it is assumed that there is perfect competition in the product market. Thus, the change in output of an organization would not affect the market price of the product. In

such a case, marginal revenue is equal to the average revenue of the product.