The Efficiency Wage Hypothesis States That Firms Can Increase Productivity

question 2

Multiple Choice

The efficiency wage hypothesis states that firms can increase productivity and profits by:

• A) paying wages that vary according to the reservation wages of workers.
• B) paying higher wages.
• C) paying lower wages.
• D) paying wages that vary according to the marginal productivity of workers.
• E) paying wages that vary according to the degree of risk aversion of workers.

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