A standard efficiency wage model pays workers higher wages in order to increase worker efficiency. As a result, firm profits increase and there is a pool of involuntarily unemployed workers. In this model, if the firm's cost of monitoring effort falls,
A. the number of shirking workers will fall.
B. the efficiency wage will fall.
C. firm profits will fall.
D. the firm will monitor less.
E. the pool of involuntarily unemployed workers will increase.
Answer: B
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a. Increase taxes b. Decrease government purchases. c. Decrease taxes and increase government purchases. d. None of the above
As it relates to owners and managers, the principal-agent problem results from the:
A. separation of corporate ownership and control. B. double taxation of corporate profit. C. limited liability of corporate owners. D. differing interests of corporate stockholders and bondholders.
The aggregate demand curve will shift to the left if
A. the nation's exports decrease. B. a reduction in the price level pushes down borrowing costs. C. people are more optimistic about their future. D. government expenditures increase.
The ________ was created as a part of the Bretton Woods agreement.
A. Federal Reserve Bank B. International Monetary Fund C. Bureau de Change D. World Bank