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i. Unrealistic assumptions:

Refer to one of the major limitations of marginal productivity theory. Marginal productivity theory stands true only under certain conditions, such as homogeneity of factors of production, perfect competition, and perfect mobility of factors of production.

Moreover, the theory is applicable in a static economy, while the real world economy is dynamic. A perfectly competitive market does not exist in reality. In addition, perfect mobility of factors is also not possible. Therefore, the marginal productivity theory of factor pricing is not applicable in the real world.