The theory of efficiency wages suggests that
A)above-equilibrium wages increase worker productivity.
B)workers with higher levels of education earn more than workers with lower levels of education.
C)workers signal their high ability to potential employers by completing formal years of schooling.
D)union workers earn more than nonunion workers.

Question

Quizplus · Accepted Answer

The theory of efficiency wages suggests that paying workers above-equilibrium wages can increase their productivity, as they feel greater job satisfaction and are motivated to work harder.

The Theory of Efficiency Wages Suggests That