One implication of efficiency wage models is that:
A)firms pay wages below the market-clearing rate
B)an excess supply of labor may be created
C)an excess demand for labor may be created
D)CEO contracts will contain golden parachute clauses

Question

Quizplus · Accepted Answer

Efficiency wage models suggest that firms pay above the market-clearing wage to increase productivity, which can lead to an excess supply of labor since more people want to work at the higher wages than there are jobs available.

One Implication of Efficiency Wage Models Is That