Get premium membership and access questions with answers, video lessons as well as revision papers.

Analyse why free markets often lead to large wage differentials

      

Analyse why free markets often lead to large wage differentials

  

Answers


Lydia
In a free market wages are determined solely by the forces of demand and supply. The market theory of wages states that wage differentials are due to differences in demand and supply conditions for different occupations. For example the wages of a premier league footballer are higher than the wages of a street sweeper because the supply of individuals with the skills to play premier league football is much more limited than the supply of workers with the skill to sweep streets. Equally the demand for premier league footballers is likely to be much higher than the demand for street sweepers. This is because a star player can generate much higher revenues for the football club through attracting more fans to the ground or club.
lydiajane74 answered the question on July 4, 2018 at 19:55


Next: Discuss the purpose of analyzing the transactions that have to be supported and describe the type of information you would collect and analyze.
Previous: Evaluate the main policies which governments could use to reduce wage inequality.

View More Economics Questions and Answers | Return to Questions Index


Learn High School English on YouTube

Related Questions