How Does the Theory of Efficiency Wages Explain Above-Equilibrium Wages

question 188

Multiple Choice

How does the theory of efficiency wages explain above-equilibrium wages?

• A)Employers are forced by competition to pay higher wages in efficient markets.
• B)Employers give their workers a higher wage in the hope that it will lead to increased productivity.
• C)Workers get higher wages when they prove they are increasing their productivity.
• D)Workers demand higher wages to compensate for poor fringe benefits.

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