Suppose that efficiency wages become more common in the economy. Imposing efficiency wages
a. increases the quantity demanded and decreases the quantity supplied of labor.
b. decreases the quantity demanded and increases the quantity supplied of labor.
c. increases the quantity demanded and decreases the quantity supplied of labor.
d. decreases the quantity demanded and increases the quantity supplied of labor.
b
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At the competitive equilibrium with a positive proportional labor income tax
A) the real wage after tax exceeds the marginal product of labor. B) the real wage after tax equals the marginal product of labor. C) the real wage after tax is lower than the marginal product of labor. D) We cannot say.
Markets do not always allocate resources efficiently, however, government always does
a. True b. False
The income effect refers to the impact of a change in
a. income on the price of a good b. the general price level caused by a change in the price of another good c. the price of a good on real income d. the price of a substitute for the good under consideration e. demand when income changes
By requiring that policyholders pay a deductible on a claim, insurers guard against
a. symmetrical information b. adverse selection c. natural selection d. moral hazard e. the winner's curse