What does the theory of efficiency wages suggest
A)Unions are successful in forcing employers to pay higher wages.
B)Employers strive to hold wages below equilibrium levels.
C)Employers find it profitable to pay above-equilibrium wages.
D)Efficient workers actually earn lower wages than those earned by inefficient workers.

Question

Quizplus · Accepted Answer

The theory of efficiency wages suggests that employers find it profitable to pay above-equilibrium wages in order to attract and retain high-quality workers. These higher wages can increase worker productivity and reduce turnover costs, ultimately leading to higher profits for the firm. Therefore, choice C is the correct answer.

What Does the Theory of Efficiency Wages Suggest