Which statement by an employer is consistent with the efficiency wage theory?

Question

Quizplus · Accepted Answer

The efficiency wage theory states that paying employees more than the market rate can actually increase productivity and reduce turnover. This is because higher wages may motivate workers to work harder and be more loyal to the company. Choice A is consistent with this theory, as the employer is explicitly stating that they pay more than the going rate to encourage their employees to work hard.

The other choices are not consistent with the efficiency wage theory. Choice B suggests that workers should lower their expectations instead of being paid a fair wage, which is not in line with the idea of efficiency wages. Choice C implies that the employer prefers to lower wages by increasing unemployment, which is not the purpose of paying efficiency wages. Choice D suggests that the employer only pays enough to attract workers at the lowest end of the pay scale, which does not reflect the idea of paying above-market wages to encourage productivity. Choice E is unrelated to the efficiency wage theory.

Which Statement by an Employer Is Consistent with the Efficiency