Figure 17.6.1
-Refer to Figure 17.6.1 above. When the no-shirking constraint (NSC) is applied, there is:
A) an increase in the quantity of labor demanded, beyond the quantity of labor supplied.
B) an efficiency wage rate with shirking higher than the wage without shirking.
C) a reduction in unemployment once the wage rate with shirking is applied.
D) an increase in wage rigidity that makes the supply of labor vertical.

Question

Figure 17.6.1
-Refer to Figure 17.6.1 above. When the no-shirking constraint (NSC) is applied, there is:
A) an increase in the quantity of labor demanded, beyond the quantity of labor supplied. 
B) an efficiency wage rate with shirking higher than the wage without shirking. 
C) a reduction in unemployment once the wage rate with shirking is applied. 
D) an increase in wage rigidity that makes the supply of labor vertical.

Quizplus · Accepted Answer

The no-shirking constraint (NSC) implies that firms pay a higher wage to discourage employees from shirking. This efficiency wage is higher than the wage that would prevail without the need to prevent shirking, leading to choice B being correct.

Figure 17.6.1 -Refer to Figure 17.6.1 Above. When the No-Shirking Constraint (NSC)