Efficiency wages refer to wages set at a level
A)that would make the natural rate of unemployment zero.
B)to encourage greater worker productivity.
C)to maximize union members' total earnings.
D)that would result in equilibrium in the labor market of each industry.

Question

Quizplus · Accepted Answer

Efficiency wages are set at a level higher than the market equilibrium wage rate in order to encourage workers to be more productive. Employers may use efficiency wages to attract higher-quality workers, lower turnover rates, and increase worker effort and motivation.

Efficiency Wages Refer to Wages Set at a Level