Suppose Mike wants to pay efficiency wages to help in the construction of his beach home.If the prevailing wage rate for electricians is $22 per hour in his area, he will probably pay which of the following amounts as an efficiency wage?
A)$22
B)$26
C)$18
D)the minimum wage

Question

Quizplus · Accepted Answer

Efficiency wages are wages that are higher than the prevailing market wage in order to motivate employees to work harder and be more productive. Therefore, Mike would probably pay a wage higher than $22 per hour, which is the prevailing wage rate. Option B of $26 per hour is a reasonable amount to motivate workers to be more productive without increasing labor costs too much. Option C of $18 per hour is too low to motivate workers, and paying the minimum wage (Option D) would not provide enough of an incentive for workers to produce at a higher level.

Suppose Mike Wants to Pay Efficiency Wages to Help in the Construction