According to the theory of efficiency wages, if a firm stops paying efficiency wages it is likely to see
A)an increase in the number of job applicants and an increase in how long workers stay on the job
B)an increase in the number of job applicants and a decrease in how long workers stay on the job
C)a decrease in the number of job applicants and an increase in how long workers stay on the job
D)a decrease in the number of job applicants and a decrease in how long workers stay on the job

Question

Quizplus · Accepted Answer

The theory of efficiency wages states that firms pay wages above the market wage to motivate their workers to be more productive. If the firm stops paying efficiency wages, workers may feel a lack of motivation and may not put in as much effort, leading to decreased productivity and job satisfaction. Therefore, it is likely that there would be a decrease in the number of job applicants and a decrease in how long workers stay on the job.

According to the Theory of Efficiency Wages, If a Firm