An efficiency wage is a:
A)higher wage paid to encourage greater worker productivity.
B)higher wage paid to reward workers who show greater productivity.
C)system of tying wage rates to overall factory efficiency rather than personal productivity.
D)wage that rises when workers invest in their human capital.

Question

Quizplus · Accepted Answer

An efficiency wage is a higher wage paid to encourage greater worker productivity, which can lead to higher profits for the firm. By paying workers a higher wage than they could earn elsewhere, firms hope to incentivize workers to be more productive and to discourage them from shirking or leaving for a better-paying job.

An Efficiency Wage Is A