Efficiency wages
A)raise the productivity of a firm's workers,so the firm hires more workers.
B)raise the productivity of a firm's workers,so the firm hires fewer workers.
C)reduce the productivity of a firms' workers,so the firm hires more workers.
D)reduce the productivity of a firm's workers,so the firm hires fewer workers.

Question

Quizplus · Accepted Answer

Efficiency wages are higher than the market-clearing wage, and they are set by firms to motivate their workers to be more productive. By paying higher wages, workers may be motivated to work harder, take fewer days off, and be more loyal to the company. Therefore, the productivity of the firm's workers is raised, and the firm can hire fewer workers to produce the same output as before.

Efficiency Wages