Rafael is the newly-appointed plant manager for a company that manufactures head phones.Rafael's senior supervisors told him that the output the firm produces,given the number of workers employed,indicates that some workers may be shirking.According to efficiency wage theory,what should he do?

Question

Quizplus · Accepted Answer

Efficiency wage theory argues that paying workers more than the market equilibrium wage rate can increase productivity by reducing shirking behavior. Therefore, Rafael should consider paying all workers more than the equilibrium wage rate to motivate them to work harder and decrease the likelihood of shirking. This approach can improve the firm's output and profitability in the long run.

Rafael Is the Newly-Appointed Plant Manager for a Company That