Which of the following statements is correct?
A)If unions successfully bargain for higher wages for their union members, employment among union members will increase.
B)Wages are higher in nonunion jobs than in union jobs of comparable skill.
C)The efficiency wage model asserts that higher wages will lead to higher productivity.
D)The imposition of a minimum wage above the market price for unskilled labor creates a shortage of labor.

Question

Which of the following statements is correct?
A)​If unions successfully bargain for higher wages for their union members, employment among union members will increase.
B)​Wages are higher in nonunion jobs than in union jobs of comparable skill.
C)​The efficiency wage model asserts that higher wages will lead to higher productivity.
D)​The imposition of a minimum wage above the market price for unskilled labor creates a shortage of labor.

Quizplus · Accepted Answer

The efficiency wage model argues that higher wages can lead to higher productivity by motivating workers to work harder and reducing turnover. This is supported by empirical evidence that shows that firms that pay higher wages tend to have more productive workers.

Option A is false; higher wages may lead to increased unemployment as some workers may be replaced by machines, while others may lose their jobs as companies try to cut costs to pay for the higher wages.

Option B is also false; although it is not always the case, research shows that unionized workers earn higher wages on average than non-union workers.

Option D is true, according to the laws of supply and demand, if the price of labor (wages) is increased above the equilibrium level (market price), then the supply of labor will exceed the demand for labor, creating a surplus of unemployed workers.

Which of the Following Statements Is Correct