An efficiency wage is:
A) above the equilibrium wage and is paid to provide workers with an incentive to increase productivity.
B) efficient because it is exactly equal to the wage rate implied by the marginal productivity theory.
C) determined by collective bargaining between unions and management.
D) equal to the value of the marginal product of labour adjusted so as to make the structure of compensation more equitable.

Question

Quizplus · Accepted Answer

An efficiency wage is paid above the equilibrium wage with the aim of motivating workers to increase productivity. It is based on the idea that paying higher wages can lead to increased motivation, improved job performance, and reduced turnover. This concept is often applied in industries where skilled workers are difficult to find or where the cost of training new workers is high.

An Efficiency Wage Is