An efficiency wage:
A)can be secured only with the help of a labor union.
B)is one that causes greater frictional unemployment.
C)is offered by an employer to encourage workers to work harder.
D)results in a less productive work force.

Question

Quizplus · Accepted Answer

An efficiency wage is offered by an employer to motivate workers to work harder and increase productivity. This type of wage is based on the idea that if workers are paid more than the market wage, they will feel more valued and be more likely to work efficiently. Therefore, choice C is the best answer. Option A is incorrect because labor unions are not required for an employer to offer an efficiency wage. Option B is incorrect because an efficiency wage is not related to frictional unemployment, which occurs when workers are in between jobs. Option D is also incorrect because the purpose of an efficiency wage is to increase productivity, not decrease it.

An Efficiency Wage