If all firms pay an efficiency wage,then
A) there is no cost to shirking because the shirking worker can receive his high wage at another firm after being caught and fired.
B) the macroeconomy would enjoy a prolonged period of near-zero unemployment.
C) there is a cost to shirking because the efficiency wage is less than it would have been if only a few firms paid it.
D) there is a cost to shirking because the shirking worker will spend a greater time unemployed after being caught and fired.

Question

Quizplus · Accepted Answer

Efficiency wages are set above the market-clearing level to increase productivity and reduce shirking. If all firms pay efficiency wages, a worker caught shirking risks losing their job and facing difficulty finding another job at a similar wage, thus incurring a cost due to potentially longer periods of unemployment.

If All Firms Pay an Efficiency Wage,then