Which of the following is true of efficiency wages?
A) They lead to a decrease in the average market wage rate.
B) They are offered to the best among potential employees.
C) They are higher for jobs with low demand.
D) They result in an increase in employee turnover.
E) They reduce the labor costs for an organization.

Question

Quizplus · Accepted Answer

Efficiency wages are higher wages paid to employees to motivate them to be more productive and efficient. They are often offered selectively to the most skilled workers in order to attract and retain the best talent. Option A is incorrect, as efficiency wages lead to an increase in the average market wage rate rather than a decrease. Option C is incorrect, as efficiency wages are typically higher for jobs with high demand and for industries facing labor shortages. Option D is also incorrect, as efficiency wages reduce employee turnover because they provide workers with a strong incentive to remain with the organization. Option E is incorrect, as efficiency wages increase labor costs for an organization rather than reducing them.

Which of the Following Is True of Efficiency Wages