Which theory explains the fact that some firms may choose to pay their employees more than they would earn as determined by equilibrium in the labour market
A)theory of efficiency wages
B)marginal-productivity theory
C)human-capital theory
D)signalling theory

Question

Quizplus · Accepted Answer

The theory of efficiency wages suggests that some firms may choose to pay their employees more than the equilibrium wage in order to increase worker productivity, reduce turnover, and attract high-quality employees. This can lead to a more efficient workforce and higher profits for the firm in the long run.

Which Theory Explains the Fact That Some Firms May Choose