The Efficiency Wage Is

question 56

Multiple Choice

The efficiency wage is:

• A) a wage at which there is no unemployment, and shirking workers are not counted in the pool of total labor.
• B) a wage at which there is a positive amount of unemployment. Individuals who are fired for shirking will be penalized with a period of unemployment.
• C) a wage at which there is a shortage of labor. Firms who fire a worker for shirking will be able to hire another one easily.
• D) the wage that is paid to high-quality, non-shirking workers. Other workers are paid the market-clearing wage.
• E) the wage that subtracts the cost of shirking from the market-clearing wage to determine that which is really paid.

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Definitions:

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of goods sold and treats fixed overhead expenses as period costs.

EBITDA

An acronym for Earnings Before Interest, Taxes, Depreciation, and Amortization, indicating a company's financial performance by measuring its profitability without considering financial, accounting, and tax effects.

Operating Income

The income generated from a company's primary business activities, before subtracting any interest and tax expenses.

Contribution Margin

The difference between the sales revenue of a product and its variable costs, used to cover fixed costs and generate profit.