Answer to Question #236385 in Economics for KAT

Question

Discuss how the wages are inter-related to the price policy?

Answer 1

Pricing - setting prices, the process of choosing the final price depending on the cost of production, competitors' prices, the ratio of supply and demand, and other factors. There are two main pricing systems, market and centralized state pricing. The choice of a specific methodology depends on what goals the organization has set for itself, what the market situation is and the consumer characteristics of the goods produced and sold. The main pricing methods that are used in the practice of market pricing are divided into four groups: - cost-oriented methods; - methods focused on consumer demand; - parametric methods; - methods focused on the competitive environment.

   Wages are remuneration for work, depending on the qualifications of the employee, the complexity, quantity, quality, and conditions of the work performed, as well as compensation and incentive payments. The essence of wages is expressed in the fact that it is:

the price of labor resources involved in the production process;

the part of the total social product expressed in monetary form, which goes into the personal consumption of the working people in accordance with the quantity and quality of labor expended;

part of the costs of production and sales of products, directed to the remuneration of employees of the enterprise.