Wage determination, policy and theories, Managerial Economics

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WAGE DETERMINATION, POLICY AND THEORIES

Wages and salaries are rewards to labour as a factor of production of goods and services.  In ordinary speech a distinction is frequently made between wages and salaries.  Some people might attempt to differentiate between them by saying that wages are payments for manual work; others may say that wages are paid weekly and salaries at longer intervals; yet others may say that wages are paid for a definite amount of work, as measured by time or price, so that if less than a full week is worked, a proportionate deduction from the weekly wage will be made whereas salaried workers suffer no such deductions.  Only the last definition is of any economic importance.  Wages are variable costs varying with output whereas salaries in the short run are a fixed cost since they do not vary with output.


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