According to the efficiency wage model,efficiency wages do NOT:
A)reduce unemployment.
B)represent a response to a type of market failure.
C)get set above the equilibrium wage.
D)reduce worker turnover.

Question

Quizplus · Accepted Answer

The efficiency wage model suggests that firms may choose to pay their workers more than the equilibrium wage in order to increase their productivity and reduce turnover. However, this can lead to higher unemployment if some workers are unable to find employment due to the higher wages demanded by firms. Therefore, efficiency wages do not necessarily reduce unemployment.

According to the Efficiency Wage Model,efficiency Wages Do NOT