Efficiency-wage theory suggests that paying
A)low wages might be profitable because they raise the efficiency of a firm's workers.
B)low wages might be profitable because they lower the efficiency of a firm's workers.
C)high wages might be profitable because they raise the efficiency of a firm's workers.
D)high wages might be profitable because they lower the efficiency of a firm's workers.

Question

Quizplus · Accepted Answer

Efficiency-wage theory suggests that paying high wages can increase worker efficiency and motivation, leading to increased productivity and profitability for the firm. This is because workers who are paid more than the market wage may feel more valued and committed to their jobs, leading to lower turnover rates and higher job performance. Therefore, Choice C is the best option.

Efficiency-Wage Theory Suggests That Paying