$$\begin{array} { | c | c | }
\hline \begin{array} { c }
\text { Hourly Wage } \
\text { Rate }
\end{array} & \begin{array} { c }
\text { Output per Hour of } \
\text { Work }
\end{array} \
\hline \$ 10 & 6 \
\hline 9 & 6 \
\hline 8 & 4 \
\hline 7 & 2 \
\hline 6 & 1 \
\hline
\end{array}$$ Refer to the table. The e?ciency wage is
A) $10.
B) $9.
C) $8
D) $6.

Question

$$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Hourly Wage } \
\text { Rate }
\end{array} & \begin{array} { c } 
\text { Output per Hour of } \
\text { Work }
\end{array} \
\hline \$ 10 & 6 \
\hline 9 & 6 \
\hline 8 & 4 \
\hline 7 & 2 \
\hline 6 & 1 \
\hline
\end{array}$$ Refer to the table. The e?ciency wage is
A) $10.
B) $9.
C) $8
D) $6.

Quizplus · Accepted Answer

The efficiency wage is the highest wage that an employer can pay to increase the productivity of its employees. Looking at the table, we can see that the output per hour stays constant at 6 for a wage rate of \$10 and \$9, but drops for lower wage rates. Therefore, the efficiency wage is between \$9 and \$8. However, the output per hour drops significantly for a wage rate of \$8, so the most efficient choice would be to pay the employees a wage rate of \$9, making the answer B.

Refer to the Table