The correct answer is: A. Marginal productivity theory of wages.
John Stuart Mill was an English philosopher, economist, and civil servant. He was an influential contributor to social theory, political theory, and political economy. He is widely considered one of the most influential thinkers in the history of classical liberalism.
The marginal productivity theory of wages is a theory of wages that states that the wage rate for any type of labor is determined by the marginal productivity of that labor. In other words, the wage rate is equal to the value of the additional output that a worker produces.
Mill was one of the first economists to develop the marginal productivity theory of wages. He argued that the wage rate is determined by the marginal productivity of labor because employers are only willing to pay workers as much as they are worth. If workers are paid more than their marginal productivity, then employers will lose money and will eventually go out of business. On the other hand, if workers are paid less than their marginal productivity, then employers will be able to make more money by hiring more workers. This will drive up the wage rate until it reaches the point where the marginal productivity of labor is equal to the wage rate.
The marginal productivity theory of wages is a widely accepted theory of wages. It is used to explain the wages of workers in a variety of industries and occupations. It is also used to explain the differences in wages between different workers.
The other options are incorrect because they are not theories of wages that are associated with John Stuart Mill.
- The wages-fund theory is a theory of wages that states that the wage rate is determined by the amount of capital that is available to pay wages. This theory was popular in the 19th century, but it is no longer widely accepted.
- The subsistence theory of wages is a theory of wages that states that the wage rate is determined by the cost of living. This theory was popular in the 18th century, but it is no longer widely accepted.
- The iron law of wages is a theory of wages that states that the wage rate will always tend to fall to the subsistence level. This theory was popular in the 19th century, but it is no longer widely accepted.