How would wages be decided in a free market?
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How would wages be decided in a free market?
Classical economists argue that wages—the price of labor—are determined (like all prices) by supply and demand. They call this the market theory of wage determination. Long story short: the price of labor is determined in the free market just like every other price, by the intersection of supply and demand.
Can a monopoly exist in a free market?
Originally monopoly meant an enterprise with a government charter and government protection from competition. Such a monopoly cannot exist in a free market.
What are the advantages and disadvantages of the minimum wage for workers?
Top 10 Minimum Wage Pros & Cons – Summary List
| Minimum Wage Pros | Minimum Wage Cons |
|---|---|
| Less government support necessary | Higher labor costs for companies |
| Higher motivation of workers | Loss of competitiveness |
| Better working quality | Replacement of workers with machines |
| Better chances to get out of poverty | Higher unemployment |
How does minimum wage affect market equilibrium?
Minimum Wages in Competitive Labor Markets In such markets, a minimum wage that is about the equilibrium wage that would otherwise result will reduce the quantity of labor demanded by firms, increase the quantity of labor supplied by workers, and cause reductions in employment (i.e. increased unemployment).
Is a free market possible?
While no pure free market economies actually exist, and all markets are in some ways constrained, economists who measure the degree of freedom in markets have found a generally positive relationship between free markets and measures of economic well being.
Is living wage and minimum wage the same thing?
The National Living Wage is higher than the National Minimum Wage – workers get it if they’re over 23. It does not matter how small an employer is, they still have to pay the correct minimum wage.