Paying efficiency wages means that wages are
A)above equilibrium,and profits are higher than otherwise.
B)above equilibrium,and profits are lower than otherwise.
C)below equilibrium,and profits are higher than otherwise.
D)below equilibrium,and profits are lower than otherwise.

Question

Quizplus · Accepted Answer

Paying efficiency wages means paying wages above the equilibrium level. This creates incentives for workers to work harder and be more productive, leading to higher profits for the firm. Therefore, profits are higher than they would be if wages were at the equilibrium level.

Paying Efficiency Wages Means That Wages Are