According to the theory of efficiency wages, it may be profitable for firms to keep wages high even in the presence of a surplus of labor.

Question

Quizplus · Accepted Answer

The theory of efficiency wages suggests that paying higher wages can lead to increased productivity, lower turnover, and better quality applicants, which can offset the higher wage costs and be profitable for firms even when there is a surplus of labor.

According to the Theory of Efficiency Wages, It May Be