Hi, Quick econs ques: What is subsistence wage rate and how do you get it? Thanks!
Subsistence wage rate = making enough money to feed you and your family. Bare min to survive.
classical theory!
I think it is a normal rate. People won’t make more even though they have superior skills. Everybody will be making same. I am not good in econ so don’t take my words…google it.
Yeah di-- I mean QJMBA got it right. If the subsistence wage rate drops too low, people will die off, leaving less people to do work in the world. Then the wage will go back up. As it gets too high, there are too many people in the world, and the value of their work drops, so the wage rate drops again. And the cycle continues.
Wage below which people die, above which people reproduce rapidly. The birth/death increase is necessary to bring the per capita income back to this level, i.e. there is no way for society to increase per capita wages above this level in the long run.
Is there a formula to calculate this? Thanks again for the info peeps
nope, its a long run equilibrium concept.