Which of the following sets of circumstances is likely to provide the best evidence in support of the theory of efficiency wages?
A) Workers in the market are unskilled and not represented by a union,and their wage exceeds the equilibrium wage.
B) Workers in the market are highly skilled and not represented by a union,and their wage exceeds the minimum wage.
C) Workers in the market are highly skilled and represented by a union,and their wage exceeds the equilibrium wage.
D) Employers in the market are known for reducing the workers' wage whenever they get an opportunity to do so.

Question

Quizplus · Accepted Answer

Efficiency wage theory suggests that paying workers above the equilibrium wage can increase productivity and efficiency. In scenario A, unskilled workers being paid above the equilibrium wage aligns with this theory, as it may incentivize them to work harder and reduce turnover, even without union representation.

Which of the Following Sets of Circumstances Is Likely to Provide