Which of the Following Is a Plausible Explanation for a Firm

question 1

Multiple Choice

Which of the following is a plausible explanation for a firm paying above-equilibrium wages to its workers?

• A)It increases the probability that a worker who shirks will be caught.
• B)It discourages workers from shirking out of fear of losing their high-paying job.
• C)The Condorcet Paradox suggests that paying high wages will result in greater effort by employees.
• D)By paying a high wage, employers solve this adverse selection problem and motivate the employees to work harder.

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Definitions:

Earnings Per Share

A profitability metric that measures the amount of net income earned per share of a company's outstanding stock.

Dividends Per Share

The amount of dividend a company pays out for each share of its stock over a specific period, typically a quarter or year.

Net Income

The total profit or loss a company generates from its operations, calculated as revenues minus expenses, taxes, and additional costs.