Aaron is the owner of a firm that produces wind power in southern Alberta. There are many such firms in the area. Aaron decides that if he pays his workers a wage higher than the going market wage, his profits will increase. What is a likely explanation for his decision?
A) The higher the wage, the less often his workers will choose to leave his firm.
B) The higher the wage, the lower will be the cost of obtaining needed supplies.
C) The higher the wage, the more he can charge for his wind power.
D) The higher the wage, the less competition will be in the industry.

Question

Quizplus · Accepted Answer

By paying his workers a higher wage, Aaron is likely hoping to retain them for a longer period of time. This can reduce turnover costs, increase productivity, and improve the overall quality of the product. Additionally, a higher wage may attract more skilled workers who can improve the efficiency of the production process.

Aaron Is the Owner of a Firm That Produces Wind