An efficiency wage
A)is higher than the market wage and tends to increase productivity.
B)is lower than the market wage and tends to increase productivity.
C)is higher than the market wage and tends to decrease productivity.
D)is lower than the market wage and tends to decrease productivity.
E)is lower than the market wage and tends to increase unemployment.

Question

Quizplus · Accepted Answer

An efficiency wage is a wage rate that is higher than the market clearing wage rate. It can increase productivity by motivating employees to work harder, reduce labor turnover and absenteeism, and enhance the quality of job applicants.

An Efficiency Wage