A firm pays the market equilibrium wage of $15.00 an hour, and the workers produce 25 units of output an hour. If the firm adopts an efficiency-wage policy, then the wage rate for these workers would be expected to

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Quizplus · Accepted Answer

Efficiency-wage policy is a policy in which firms pay their workers more than the market equilibrium wage in order to increase their productivity and reduce labor turnover. Therefore, if the firm adopts an efficiency-wage policy, it is expected that the wage rate for these workers would increase and productivity would also increase. This is because the higher wage rate would motivate workers to work harder, be more loyal to the firm and take fewer days off, which would lead to an increase in their productivity.

A Firm Pays the Market Equilibrium Wage of $15