According to the efficiency wage model,firms tend to pay workers
A) the market-clearing wage that efficiently equates labor supplied and demanded.
B) in excess of the market-clearing wage to provide an incentive for productivity and efficiency.
C) less than the market-clearing wage to assure themselves a pool of workers ready to replace workers who quit.
D) less than the market-clearing wage to minimize labor cost per unit of production.

Question

Quizplus · Accepted Answer

According to the efficiency wage model, firms tend to pay workers above the market-clearing wage to provide an incentive for productivity and efficiency. This is done to retain productive workers and motivate them to work harder, which ultimately benefits the firm.

According to the Efficiency Wage Model,firms Tend to Pay Workers