The bonding critique criticizes the model of efficiency wages because

A. workers do not know how well the firm can monitor worker effort.
B. firms cannot issue bonds to pay for labor costs.
C. profit-maximizing firms should never be willing to pay more than the competitive wage.
D. worker effort is unrelated to wages.
E. workers should be willing to give the firm collateral that the firm would keep if the firm ever caught the worker shirking, and in exchange the worker would be willing to work for a wage less than the efficiency wage.


Answer: E

Economics

You might also like to view...

Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.

A. lower; potential B. higher; potential C. higher; higher D. lower; higher

Economics

Explain why the real interest rate is the opportunity cost of loanable funds

What will be an ideal response?

Economics

The Shipbreakers of Alang utilize much labor and little capital, thereby supporting the applicability of the

A) factor proportions explanation of the sources of comparative advantage. B) specific factor theory of comparative advantage. C) monopolistic competition theory of comparative advantage. D) scale economies theory of comparative advantage. E) basis of the non-dumping legislation.

Economics

What are the primary arguments in favor of a rules approach, and what are the primary arguments in favor of a discretion approach?

What will be an ideal response?

Economics