Comment on the following Physicians earn abovecompetitive wa

Comment on the following: “Physicians earn above-competitive wages and the best evidence of this is the very high annual incomes that some doctors earn.”

Solution

The given assertion has pointed towards the conclusion that physicians earn above-competitive wage based on the evidence that some doctors earn very high annual incomes.

However, there are some anamolies in the given conclusion.

First problem with given conslusion is that it is based on the income of some doctors. These doctors may be specialist and specialist tends to earn more. However, their number is few while general medical practitioners are large in number and there annual income is not that high. Moreover, wage rate can be defined on basis of average earnings of all physicians and not on the basis of earnings of few physicians.

So, to conclude about wages of physicians on the basis of earnings of some doctors does not provide the real picture. If average earning of all physicians taken together is analyzed then it can be seen that wage rate is at the competitive level.

Secondly, conclusion has only taken into account the income but has not taken into account the cost associated with becoming a physician.

True wage can only be identified when cost is also incorporated. If we take into account the high cost associated with becoming a physician and earning forgone due to considerable number of years being spent at study then it can be seen that wage rate of physicians is not as high as it is made out. In fact, it is within competitive levels.