You run a factory that makes leather shoes. You opt to pay your workers twice the going wage in order to reduce tardiness and shirking and to increase workers' morale and effort. This scenario is an example of:

Question

Quizplus · Accepted Answer

This is an example of an efficiency wage, where the employer pays higher than the market wage in order to increase productivity and reduce shirking. It is not a minimum wage as the employer chose to pay twice the going wage, not the legal minimum. It is not discouraged workers, as this refers to individuals who have given up looking for a job. It is also not cyclical unemployment, which refers to unemployment caused by a recession or downturn in the business cycle.

You Run a Factory That Makes Leather Shoes