How does the market theory of wage
determination explain the difference in pay rates?

The market theory of wage determination explains the difference in pay rates.

Explanation:

The price of every commodity is decided by its supply and demand. If the supply is high the cost will be low. The commodity that the workers offer is labour and wages are the price paid for labour.  

Market theory of wage determination concludes that wages are determined by the supply and demand of labour. When there are a high number of labourers the supply of labour is high and thus the price will low. This means the workers will be paid low.  

When there are less number of labourers to do a work the demand will be high for the labour and the workers will be paid high.  

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