The Theory That Holds That Firms May Try to Increase

question 84

Multiple Choice

The theory that holds that firms may try to increase productivity by paying a wage in excess of the market-clearing wage is called the

• A) efficiency-wage theory.
• B) reservation wage theory.
• C) excess wage theory.
• D) wage-inflation theory.

---

Definitions:

Congress

The bicameral legislature of the Federal Government of the United States, consisting of the House of Representatives and the Senate.

Lost Profits

Financial gains that could have been earned but were not because of a specific event or action that prevented such earnings.

Incidental Damages

Incidental damages refer to reasonable expenses incurred by a party as a result of another party’s breach of contract, including costs to mitigate damages.

Carrier

An entity that offers transportation services for goods or people, often used in the context of shipping or telecommunications.