Question:
Subsistence Theory of Wages is also called as ____________.
Subsistence Theory of Wages is also called as ____________.
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Remember that the "Iron Law" implies a rigid, unbending rule—reflecting the theory's view that wages are permanently bound to the bare minimum subsistence level.
Updated On: Jul 24, 2026
- LEMU
- LDMU
- Scarcity Law
- Iron Law of Wages
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The Correct Option is D
Solution and Explanation
Step 1: Understanding the Concept:
The Subsistence Theory of Wages is an early classical economic theory regarding the long-term determination of wages in a competitive labor market.
Detailed Explanation:
- This theory, popularized by classical economists like David Ricardo and Lassalle, posits that real wages in the long run tend to gravitate toward the minimum level necessary to sustain the life of the worker and their family (the subsistence level).
- If wages rise above this level, the population increases, leading to a larger labor supply that subsequently drives wages back down to the subsistence level.
- Because of this rigid, inescapable downward pressure on wages, Ferdinand Lassalle named this theory the Iron Law of Wages.
Step 2: Final Answer:
The alternative name is the Iron Law of Wages, which corresponds to Option (D).
The Subsistence Theory of Wages is an early classical economic theory regarding the long-term determination of wages in a competitive labor market.
Detailed Explanation:
- This theory, popularized by classical economists like David Ricardo and Lassalle, posits that real wages in the long run tend to gravitate toward the minimum level necessary to sustain the life of the worker and their family (the subsistence level).
- If wages rise above this level, the population increases, leading to a larger labor supply that subsequently drives wages back down to the subsistence level.
- Because of this rigid, inescapable downward pressure on wages, Ferdinand Lassalle named this theory the Iron Law of Wages.
Step 2: Final Answer:
The alternative name is the Iron Law of Wages, which corresponds to Option (D).
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