If all employers pay an efficiency wage and if workers in areas with low unemployment rates can easily find alternative jobs,then one would expect
A) average wages to be directly (positively) related to area unemployment rates.
B) average wages times one minus the unemployment rate to be the same across areas.
C) the duration of unemployment in an area, but not necessarily the rate, to be inversely related to the average wage of the area.
D) average wages will be higher in areas with low unemployment rates.

Question

Quizplus · Accepted Answer

If all employers pay an efficiency wage and if workers in areas with low unemployment rates can easily find alternative jobs, then employers in those areas will have to offer higher wages to attract and retain workers. Therefore, average wages will be higher in areas with low unemployment rates.

If All Employers Pay an Efficiency Wage and If Workers