An efficiency wage
A)is higher than the market wage and tends to increase productivity.
B)is lower than the market wage and tends to increase productivity.
C)is higher than the market wage and tends to decrease productivity.
D)is lower than the market wage and tends to decrease productivity.

Question

Quizplus · Accepted Answer

An efficiency wage is a wage that is higher than the market wage in order to motivate workers to be more productive. This incentive creates a higher level of productivity for the firm and benefits both the worker and the employer. Therefore, the correct answer is A.

An Efficiency Wage