The theory of efficiency wages asserts that
A)employers set wages based on each employee's productivity.
B)employers strive to hold wages below equilibrium levels.
C)employers may find it profitable to pay above-equilibrium wages.
D)efficient workers actually earn lower wages than those earned by inefficient workers.

Question

Quizplus · Accepted Answer

The theory of efficiency wages suggests that employers may find it profitable to pay above-equilibrium wages. This is because paying higher wages may attract and retain more productive workers, leading to higher overall productivity and profitability for the firm.

The Theory of Efficiency Wages Asserts That