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Basic economic theory suggests that wages depend on a workers marginal revenue Product MRP. (this is basically the value that they add to the firm who employs them
MRP is determined by two factors
MPP - Marginal physical product - the productivity of a worker
MR - Marginal Revenue of last good sold - Effectively the price and demand for the good that the worker produces.
Another factor that determines pay, is the demand for the good. For example, the best football players get paid much more than the best hockey players because there is much more demand for watching football games, there is more money in the sport so clubs are willing and able to pay much higher salaries to get the service of the best players.
As well as demand, pay will be determined by supply. Workers who have specialist skills will generally be awarded with higher pay. You could say if someone spends 5 years to be trained as an accountant, they deserve higher pay to reimburse them for the investment of time in becoming skilled.
What else can I help you with?
David Ricardo's theory called the Iron Law of Wages came to be called?
David Ricardo's theory called the Iron Law of Wages came to be called the Theory of Efficiency of Wages. The Iron Law of Wages says that the worker is going to be paid the minimum wage needed to survive.
The theory of wages are based on supply and demand for a worker's skills is called what theory?
market theory of wage determination.
What economic theory does laissez-faire rely on to regulate prices and wages?
Laissez-faire theorists argue that the market forces of SUPPLY AND DEMAND will serve to set prices and wages in the marketplace.
What wage theory impact on output?
Wage theory suggests that wages influence labor supply and productivity, which can directly impact output levels in an economy. Higher wages can incentivize workers to increase their effort and productivity, leading to greater efficiency and output. Conversely, if wages are too low, it may result in reduced motivation and higher turnover rates, potentially decreasing overall productivity. Therefore, the relationship between wages and output is critical for understanding labor market dynamics and economic performance.
What is economic surplus?
(in Marxist theory) the excess of value produced by the labor of workers over the wages they are paid.
When was The Theory of Wages created?
The Theory of Wages was created in 1932.
What the theory of the Iron Law of Wages?
The Iron Law of Wages is an economic theory that suggests wages will tend to settle at the minimum level necessary for workers to survive. This theory implies that increases in wages would eventually be offset by rising population growth, leading to a cycle of low wages and high unemployment. The theory has been widely debated and criticized for its assumptions and implications.
What of these goes through cycles according to the theory of the Iron Law of Wages?
The theory of the Iron Law of Wages suggests that wages fluctuate around a subsistence level due to the relationship between labor supply and demand. This theory implies that as population grows, wages tend to decrease to a subsistence level, leading to a cycle of low wages, increased population, and low wages again.
David Ricardo's theory called the Iron Law of Wages came to be called?
David Ricardo's theory called the Iron Law of Wages came to be called the Theory of Efficiency of Wages. The Iron Law of Wages says that the worker is going to be paid the minimum wage needed to survive.
What goes through cycles according to the theory iron law of wages?
population
What kind of science did David Richards Theory called the iron wages come to be called?
David Ricardo's theory of wages is part of the field of economics, specifically known as classical economics. His theory of iron law of wages posits that in the long run, wages tend to settle at the subsistence level necessary for the workers to survive.
What goes through cycles according to theory of iron law of wages?
According to the theory of the iron law of wages, wages tend to fluctuate in cycles based on supply and demand. When there is a surplus of labor, wages tend to decrease, as employers have more options and can pay workers less. Conversely, when there is a shortage of labor, wages tend to increase as employers need to compete for workers.
What are the different theories of wages?
Some of the key theories of wages include the classical theory, which states that wages are determined by the supply and demand for labor in the market; the neoclassical theory, which emphasizes the role of productivity and marginal revenue product in determining wages; and the bargaining theory, which suggests that wages are determined through negotiations between employers and workers. Additionally, the dual labor market theory posits that there are two distinct segments of the labor market with different wage-setting mechanisms.
What did the national War Labor Board do in World War 1?
It set wages and negotiated with labor unions.
What kind of science did David Ricardo's theory of the iron law of wages come to be called?
DISMAL
What has the author JR Hicks written?
J.R Hicks has written: 'The theory of wages' -- subject(s): Wages, Labor economics, Unemployed, Labor unions
What was Thomas Malthus' minimum wage theory?
The Iron Law Of Wages
