Efficiency wages will:
A)make wages inflexible downward.
B)elicit minimum work effort from workers.
C)impose a legal price floor on wages.
D)increase the number of strikes.

Question

Quizplus · Accepted Answer

Efficiency wages are wages that are intentionally set by employers above the market clearing wage in order to attract and retain higher quality workers. This creates a higher level of productivity among workers, which can offset the higher wage costs. However, if wages were to fall, these higher quality workers may leave for jobs with better compensation. Therefore, efficiency wages make wages inflexible downward, as employers do not want to risk losing their productive workers.

Efficiency Wages Will