The theory of efficiency wages provides a possible explanation as to why
A)workers form unions.
B)firms should try to reduce surpluses of labor.
C)firms may be inclined to keep their workers' wages above the equilibrium level.
D)firms may be inclined to keep their workers' wages below the equilibrium level.

Question

Quizplus · Accepted Answer

The theory of efficiency wages suggests that firms may have an incentive to keep wages above the equilibrium level to motivate workers to perform better and reduce turnover. This can increase productivity and ultimately result in higher profits for the firm.

The Theory of Efficiency Wages Provides a Possible Explanation as to Why