Explain Why Each of the Following Businesses Would Have an Incentive

question 11

Essay

Explain why each of the following businesses would have an incentive to pay the efficiency wage.
(A) A garten service that awn frve tucks that it sends to hauseholds wha purchase the service
(B) A fast-fadd restaurant
(C) A warehause that uses a camplicated camputer system to track its inventary

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Definitions:

Marginal Utility

The additional satisfaction or benefit received from consuming one more unit of a product or service.

Asymmetric Information

One of the parties to a transaction has information relevant to the transaction that the other party does not have.

Adverse Selection

A situation in which asymmetric information results in high-quality goods or high-quality consumers being squeezed out of transactions because they cannot demonstrate the quality of the product they are offering for sale.

Fair Bet

A wager in which the expected value to both parties involved is equal; no side has an advantage.