A higher wage could result in a lower labor cost per unit of output than a lower wage if the higher wage
A) brings forth greater work effort.
B) increases supervision costs.
C) increases job turnover.
D) increases worker absenteeism.

Question

Quizplus · Accepted Answer

A higher wage can motivate workers to put forth greater effort and produce more output per hour, ultimately resulting in a lower labor cost per unit of output. This is known as the efficiency wage theory. However, choices B, C, and D would all result in higher labor costs and contradict the efficiency wage theory.

A Higher Wage Could Result in a Lower Labor Cost