Which of the following is true of an efficiency wage?
A)It refers to the markup of the actual wage over the minimum wage.
B)It refers to the wage paid to workers above their opportunity cost,which compels them to work harder.
C)It refers to the wage paid to workers that minimizes total expenditure on labor costs.
D)It measures the markup of wages paid to workers and their actual output.

Question

Quizplus · Accepted Answer

An efficiency wage refers to the wage paid to workers above their opportunity cost, which compels them to work harder. It is used as an incentive for workers to perform better, leading to increased productivity and ultimately benefiting the firm.

Which of the Following Is True of an Efficiency Wage