The idea of paying workers an efficiency wage is that
A)employers will find it profitable to hire more workers.
B)workers receive wages consistent with their specific compensating differentials.
C)workers and management gain at the expense of the stockholders of the company.
D)workers have the incentive to work harder, thus increasing their marginal productivity.

Question

Quizplus · Accepted Answer

The concept of efficiency wages suggests that by paying workers more than the market equilibrium wage, employers can incentivize their employees to work harder, be more productive, and possibly reduce turnover, thus increasing their marginal productivity. This is because workers recognize the value of these higher wages and are motivated to maintain their employment by performing well.

The Idea of Paying Workers an Efficiency Wage Is That