One reason the lowest wage rate is not necessarily the same as the eﬃciency wage is that workers might
A) be more productive at a higher wage rate.
B) have more incentive to shirk at higher wage rates.
C) be tempted to switch jobs more frequently at higher wage rates.
D) be less inclined to work well at a higher wage rate.

Question

Quizplus · Accepted Answer

The eﬃciency wage refers to the wage rate that maximizes worker productivity and reduces turnover, while the lowest wage rate simply represents the minimum amount an employer is willing to pay for labor. It is possible that a higher wage rate could increase worker productivity, leading to greater efficiency and output. Therefore, the lowest wage rate may not be the same as the efficiency wage if a higher wage rate leads to increased productivity.

One Reason the Lowest Wage Rate Is Not Necessarily the Same