Which of the following principles does NOT support the notion of efficiency wages?
A)the diminishing marginal utility principle
B)the marginal principle
C)the opportunity cost principle
D)the cost-benefit principle

Question

Quizplus · Accepted Answer

The diminishing marginal utility principle does not directly support the notion of efficiency wages. Efficiency wages are based on the idea that paying workers more than the market rate can lead to increased productivity, loyalty, and reduced turnover, which are not directly related to the concept of diminishing marginal utility. This principle suggests that as a person consumes more of a good, the additional satisfaction (utility) gained from consuming an additional unit decreases, which is a concept more related to consumer behavior than to wage policies designed to enhance worker efficiency.

Which of the Following Principles Does NOT Support the Notion