Michael decides to hire some additional workers for his roofing company.The equilibrium wage is $17 per hour.Efficiency wage theory suggests that it is reasonable for Michael to offer
A)$17 per hour.
B)less than $17 per hour because some people would be willing to work for less.
C)less than $17 an hour to prevent shirking.
D)more than $17 per hour in order to attract a better pool of applicants.

Question

Quizplus · Accepted Answer

Efficiency wage theory suggests that paying more than the equilibrium wage can attract higher-quality applicants, reduce turnover, and increase productivity by motivating workers to perform better.

Michael Decides to Hire Some Additional Workers for His Roofing