Employers May Choose to Pay Efficiency Wages That Are Higher

question 26

Multiple Choice

Employers may choose to pay efficiency wages that are higher than the equilibrium wage because

• A) workers will be more willing to accept monitoring by their employers.
• B) the threat of unemployment will help prevent workers from shirking.
• C) the higher compensation will encourage workers to take more risks.
• D) higher wages will attract only the most qualified workers and thus help solve the employer's adverse selection problem 2.

---

Definitions:

Endorsement

Approval, support, or recommendation of a product, service, or concept, often by a public figure or organization.

Negotiated

Refers to the process by which parties discuss and reach a mutual agreement on the terms and conditions of a deal or contract.

Joint Payees

Individuals or entities who are named together on a financial instrument and to whom the amount specified is payable jointly.

Payable

The status of an obligation that is due to be paid.