An eﬃciency wage is one that
A) increases the velocity of money.
B) minimizes the ﬁrm's labor cost per unit of output.
C) results from signiﬁcant changes in technology and labor.
D) is imposed by government to guarantee workers a living wage.

Question

Quizplus · Accepted Answer

An efficiency wage is a wage that exceeds the market equilibrium wage, with the aim of increasing productivity and reducing turnover. It is not related to increasing the velocity of money, changes in technology and labor, or imposed by government guarantees. The objective of an efficiency wage is to minimize the firm's labor cost per unit of output by improving worker motivation, reducing absenteeism, and increasing job satisfaction.

An Eﬃciency Wage Is One That