An eﬃciency wage is
A) a below-market wage.
B) an above-market wage.
C) a "wage" that contains a proﬁt-sharing component.
D) a wage that is free to rise or fall from day to day, depending on labor supply and demand.

Question

Quizplus · Accepted Answer

An efficiency wage is an above-market wage paid by employers to increase worker productivity and decrease turnover. It is based on the idea that workers who receive higher pay than the market rate will be more motivated to work efficiently and effectively, and will be less likely to leave their jobs for higher-paying opportunities elsewhere.

An Eﬃciency Wage Is