In any efficiency wage model,it must be true that

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Quizplus · Accepted Answer

In an efficiency wage model, wages are set above the market-clearing level to increase worker productivity and reduce turnover. This creates a situation of disequilibrium in the labor market, where there is excess demand for labor. Nominal wages are also typically inflexible due to the contracts or social norms that govern them. To ensure that this policy is efficient, the marginal benefit of increased productivity from higher wages must equal the marginal cost of paying those higher wages. Therefore, all of the above statements are true in an efficiency wage model.

In Any Efficiency Wage Model,it Must Be True That