Why would a firm pay efficiency wages?
What will be an ideal response?
An efficiency wage is a wage that is higher than the market wage. Firms pay efficiency wages to raise productivity. Studies show that workers are motivated to work harder if they are paid higher wages. Put differently, a firm does not monitor workers as closely in order to get them to be more productive. The higher wage motivates them to be productive.
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Refer to Figure 6-8. Identify the two goods which are substitutes
A) Good X and Good Z B) Good Y and Good Z C) Good X and Good Y D) It is not possible to distinguish any relationship among the goods.
An appreciation of the domestic currency can be caused by ________
A) a decrease in the domestic interest rate B) an increase in the domestic interest rate and expectation of an increase in the value of the domestic currency C) an increase in the domestic interest rate and the expectation of a decrease in the value of the domestic currency D) the expectation of a decrease in the value of the domestic currency
The usefulness of the price-taker model requires that the firm's decision makers
a. act to maximize their total revenue and fully understand marginal costs and marginal revenues. b. be able to draw accurate marginal cost and marginal revenue curves. c. place the social interest of the economy above their individual self interests. d. seek to maximize the profits of the firm.
Which joint profit is earned when the two firms charge different prices from each other?
a. $18,000
b. $17,600
c. $17,400
d. $12,000