A firm is likely to pay high efficiency wages when ________.
A) it is easy to monitor workers
B) it is not easy to monitor workers
C) there is excess supply of labor in the labor market
D) the minimum wages are set above the equilibrium wage rate

Question

Quizplus · Accepted Answer

A firm is likely to pay high efficiency wages when it is not easy to monitor workers. This is because high wages provide an incentive for workers to work harder and stay longer with the company, which can increase productivity and profitability. When it is difficult to monitor workers, such as in jobs that require a high degree of skill or discretion, high wages can help ensure that the workers are motivated to perform at their best.

A Firm Is Likely to Pay High Efficiency Wages When