Sometimes wages are set above the equilibrium level when firms pay
A)workers with more seniority higher wages than newly hired workers.
B)efficiency wages to reduce turnover.
C)compensating differentials to workers who work the night shift.
D)more attractive salespeople higher wages than less attractive salespeople.

Question

Quizplus · Accepted Answer

Efficiency wages are set above the equilibrium level by firms to reduce turnover, increase productivity, and attract better applicants. This strategy assumes that higher wages lead to more efficient and productive workers, which can offset the higher wage costs.

Sometimes Wages Are Set Above the Equilibrium Level When Firms