Explain the efficiency wage theory
What will be an ideal response?
The efficiency wage theory says that firms may offer above market wages with the goal of increasing labor productivity. Labor productivity would increase if the higher wage reduced turnover, attracted more productive workers, and encouraged current workers to work harder so they won't lose their jobs.
You might also like to view...
When future labor income falls in a large open economy, it causes the current account to ________ and investment to ________
A) fall; rise B) rise; remain unchanged C) fall; fall D) rise; rise
One way to remove the excess labor supply problem from a minimum wage policy is to have the government hire all unemployed workers at the minimum wage. What is the key drawback of this version of a minimum wage policy?
A) The deadweight loss may increase substantially. B) The cost to the government may be very large. C) Consumer surplus losses increase further. D) A and B are correct. E) B and C are correct..
Adverse selection is
a. the tendency of a person who is imperfectly monitored to engage in dishonest or otherwise undesirable behavior. b. an action taken by an uninformed party to induce an informed party to reveal information. c. the failure of majority voting to produce transitive preferences for society. d. the tendency for the mix of unobserved attributes to become undesirable from the standpoint of an uninformed party.
If a firm experiences diminishing marginal productivity of labor, the total-cost curve gets flatter as the quantity of output increases
a. true b. false