According to the __ , workers may earn a wage rate higher than the value of its marginal product because that provides an incentive to perform efficiently.

Question

Quizplus · Accepted Answer

The efficiency-wage model suggests that workers may earn a wage rate higher than the value of its marginal product because it provides an incentive to perform efficiently. This theory suggests that paying workers more than what their productivity would normally warrant can improve worker motivation, reduce turnover, and increase productivity. The other options, such as marginal productivity theory and diminishing returns theory, do not address the idea of paying workers more than their marginal product. The increasing-returns model focuses on the idea that output will increase at an increasing rate with additional inputs, and is not directly related to wage rates.

According to the __ , Workers May Earn a Wage