Which of the following is an example of an efficiency wage?
A)A higher wage paid to a more experienced worker
B)A below-equilibrium wage paid by a small business exempt from minimum-wage laws
C)An above-equilibrium wage paid by a firm to reduce turnover costs
D)A wage tied to participation in a government-sponsored job training program

Question

Quizplus · Accepted Answer

Efficiency wages are above-equilibrium wages paid by firms to increase worker productivity and reduce turnover costs. By paying more than the market rate, firms can attract better talent, reduce the frequency of hiring and training new employees, and potentially increase loyalty and effort among workers.

Which of the Following Is an Example of an Efficiency