Answer to Question #160007 in Economics of Enterprise for Luyanda

Question

The main function of wages are

A. Estimated

B. Compensatory

C. Remuneration

D. Piece system

Answer 1

$\bold {Answers} \\ \bold {A \space and \space B}$

$\bold {Explanation}$

Wages are both remuneration and compensatory.

Labour has alternative uses, therefore, workers have several alternatives for their labour. They can work for company A, or company B, or put their effort to other alternative uses, such as operating a business. More so, by working, leisure, the most immediate alternative to labour, is forgone. As a result, wages are a compensation to the foregone benefits. They are a compensation to the opportunity cost; compensating for what could have been done and earned had the employee not offered his/her labour to the firm.

Also, remuneration and compensation are quite related. Remuneration is a form of compensation. It refers to an exchange of wages for labour. Thus, labourers are remunerated if they are offered wages in exchange of their labour.

Thus, the main functions of wages are remuneration and compensation.