According to the efficiency wage model, all of the following are correct EXCEPT that efficiency wages:
A) reduce unemployment.
B) are a type of market failure.
C) are above the equilibrium wage.
D) may reduce worker turnover.

Question

Quizplus · Accepted Answer

Efficiency wages do not reduce unemployment; instead, they can contribute to higher unemployment by setting wages above the equilibrium level, which can lead to a surplus of labor.

According to the Efficiency Wage Model, All of the Following