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.
E)negotiated by labour unions.

Question

Quizplus · Accepted Answer

Efficiency wages are designed to motivate workers to increase their productivity. By paying workers more than the market wage, employers incentivize employees to work harder and produce more output, which can ultimately benefit the firm through increased profits. This approach can be particularly effective for firms operating in industries with high turnover rates or where employee effort is critical to success.

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