Above-equilibrium wages caused by efficiency wages will most likely result in
A)a shortage of labor.
B)increased unemployment.
C)compensating wage differentials.
D)an decrease in the quantity of labor supplied.

Question

Quizplus · Accepted Answer

When firms pay wages above-equilibrium wages due to efficiency wages, a surplus of labor will result, leading to an increase in unemployment. Workers will be willing to offer more labor at the higher wages, but the excess supply of labor will lead to a reduction in employment.

Above-Equilibrium Wages Caused by Efficiency Wages Will Most Likely Result