What term best refers to a wage payment made to an agent that exceeds his opportunity cost of working and discourages the agent from shirking?
A)Living wage
B)Efficiency wage
C)Minimum wage
D)Efficiency payment
E)Termination wage

Question

Quizplus · Accepted Answer

An efficiency wage is a payment made to an agent (employee) that exceeds their opportunity cost of working and serves as an incentive for them to work hard and not shirk. This type of wage is often used by firms to increase productivity and reduce turnover. Firms that pay efficiency wages often have a lower shirking rate and higher morale among their employees. A living wage is a wage that enables workers to meet their basic needs. A minimum wage is the lowest legal wage that can be paid to workers. An efficiency payment and termination wage are not commonly used terms in economics.

What Term Best Refers to a Wage Payment Made to an Agent