If an employer's behavior is supportive of the theory of efficiency wages, the employer would
A)raise wages in an effort to increase worker effort.
B)raise wages in an effort to increase worker turnover.
C)decrease wages in an effort to increase worker effort.
D)decrease wages in an effort to increase worker turnover.

Question

Quizplus · Accepted Answer

The theory of efficiency wages suggests that higher wages can increase worker effort and productivity. Therefore, an employer following this theory would raise wages in an effort to motivate workers to work harder and more efficiently. Option B and D are not consistent with the theory, as they would increase worker turnover, which is not desired in the theory of efficiency wages. Option C is also not consistent with the theory, as decreasing wages would likely lead to decreased worker effort and lower productivity.

If an Employer's Behavior Is Supportive of the Theory of Efficiency