Question

Explain different theories of wage determination in detail.

Answer 1

theory of wage determination is the theory that wages (that is, the price of labor) are determined (like all prices) by supply and demand.So, when workers selltheir labor, the price they can charge is basically influenced by SUPPLY (the number of workers available) and DEMAND (number of workers needed).If employers can't find enough workers to meet their needs, they will keep raising their wage offers untilmore workers are attracted. If workers are in abundance, then wages will fall until the surplus labordecides to go elsewhere in search of jobs.Bonus points: The"equilibrium wage rate" is established when supply and demand meet.