Four Employers Have Justified Their Actions as Follows

question 182

Multiple Choice

Four employers have justified their actions as follows. Whose logic is consistent with the logic of efficiency wage theory?

• A) Jay develops a new assembly line technology that limits the amount shirking workers may do, so he reduces what he pays his employees so as to make it closer to the equilibrium wage.
• B) Kay pays her workers less than the equilibrium wage so they won't have the time or money to look for work somewhere else.
• C) Ray pays his workers in a developing country more than the going wage, hoping that they will get a better diet and so be more productive.
• D) Ms. Fay pays her workers the market wages, but she hires more supervisors to make sure workers do not shirk.

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Definitions:

New Contract

An agreement created to establish or modify legal obligations between parties that may replace or supplement a previous contract.

Local Transport

Transportation services operating within a particular region or city, typically involving buses, trams, and local trains.

Delivery Van

A vehicle used for transporting goods, often belonging to companies offering delivery services of products.

Imperfect Tender

A situation where the goods delivered or services rendered do not fully comply with the specifications or requirements outlined in a contract.