Which of the Following Is the Main Argument for Why

question 3

Multiple Choice

Which of the following is the main argument for why efficiency wages can help encourage workers to provide full effort on a job?

• A) Workers do not want to risk becoming unemployed when there is a reserve of involuntary unemployed workers willing to take their job that pays above the competitive wage.
• B) Workers do not understand that high-wage workers do not need to work hard to maintain their job.
• C) Management hires fewer workers at the higher efficiency wage, and therefore all workers must work harder.
• D) When the efficiency wage is less than the competitive wage, workers work harder in order to convince other firms to hire them away at the higher, competitive wage.
• E) None of these provide an argument for why efficiency wages encourage workers to provide full effort on a job.

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Definitions:

Annual Rate of Decline

The percentage at which a value decreases over the course of one year.

Strip Bond

A debt security that has had its principal and coupon payments detached and sold separately as zero-coupon bonds.

Compounded Semi-Annually

Interest that is computed and added to the original amount every six months, resulting in compound interest.

Compounded Annually

A method where interest is added to the principal balance once a year, affecting the total interest earned or paid.