According to the efficiency wage model, firms tend to pay workers
A) the market-clearing wage that efficiently equates labor supplied and demanded.
B) in excess of the market-clearing wage to provide an incentive for productivity and efficiency.
C) less than the market-clearing wage to assure themselves a pool of workers ready to replace workers who quit.
D) less than the market-clearing wage to minimize labor cost per unit of production.
B
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In a demand-pull inflation, money wage rates rise because
A) a decrease in aggregate demand creates a labor shortage. B) an increase in aggregate demand creates a labor surplus. C) an increase in aggregate demand creates a labor shortage. D) a decrease in aggregate demand creates a labor surplus. E) an increase in aggregate supply creates a labor shortage.
The optimal purchase rule is stated as
A. TU = MU. B. MU = P. C. TU = P. D. MU = 0.
Refer to Figure 6.6. What area represents the compensation for an increase in the price of gasoline from $1.75 to $3.00 per gallon?
A. a + b + c + d + e
B. f + g + h
C. a + b + c
D. d + e
Suppose that land and capital are substitute resources. If rent rose, then the employment of capital would be _____ by the substitution effect and _____ by the output effect.
A. increased; increased B. decreased; decreased C. increased; decreased D. decreased; increased