XYZ Company pays its workers very well.The wages of workers at XYZ significantly exceed regional and national averages for people who do similar work.In fact,all indications are that XYZ workers' wages are well above equilibrium levels.What might explain the fact that XYZ pays its workers so well
A)There is no problem of asymmetric information at XYZ between the company's management and its workers.
B)Workers at XYZ have never demonstrated any tendency to shirk.
C)XYZ wants to maintain a good mix of workers in terms of their true abilities.
D)XYZ is not worried about lemons.

Question

Quizplus · Accepted Answer

It is possible that XYZ wants to maintain a good mix of workers in terms of their true abilities by paying higher wages than the equilibrium level. By paying higher wages, XYZ can attract and retain workers with a wider range of abilities, which can increase the overall productivity of the company. This is an example of efficiency wages, where firms pay higher wages to increase worker effort, reduce turnover, and improve worker quality. As such, the explanation that XYZ wants to maintain a good mix of workers in terms of their true abilities is the best choice.

XYZ Company Pays Its Workers Very Well