If firms pay what are called "efficiency wages," they pay wages that
A)motivate workers to increase their productivity.
B)are lower than average to ensure maximum profit.
C)will eventually lower the unemployment rate.
D)are mandated by the government.

Question

Quizplus · Accepted Answer

Efficiency wages are wages that motivate workers to increase their productivity, leading to higher levels of output and profits for the firm. This approach is based on the idea that paying higher wages will attract more motivated and more qualified workers who are more likely to provide higher levels of output. This, in turn, will help to offset the increased wage costs, leading to higher profits for the firm in the long run.

If Firms Pay What Are Called "Efficiency Wages," They Pay