Firms may find it profitable to pay wages above the equilibrium level in order to give workers an incentive to avoid shirking their responsibilities.

Question

Quizplus · Accepted Answer

By paying wages above the equilibrium level, workers may feel more valued and therefore be more motivated to work harder and avoid shirking their responsibilities. This can lead to higher productivity and profits for the firm in the long run.

Firms May Find It Profitable to Pay Wages Above the Equilibrium