The "efficiency wage" is the wage at which:
A) employees have no incentive to shirk.
B) employees have an incentive to do the optimal (positive) amount of shirking.
C) the cost of looking for work is equal to the value of the leisure time for the unemployed individual.
D) there is no unemployment.
E) there is only frictional unemployment.

Question

Quizplus · Accepted Answer

The efficiency wage is the wage at which employees have no incentive to shirk. This means that the wage is high enough to provide an incentive for employees to work hard and avoid shirking or slacking off on the job. If the wage is too low, employees may be more likely to shirk or engage in other forms of unproductive behavior on the job. Therefore, paying a higher efficiency wage can actually increase productivity and overall output in the long run.

The "Efficiency Wage" Is the Wage at Which