An Efficiency Wage Premium Serves the Same Function as a Bond

question 10

Multiple Choice

An efficiency wage premium serves the same function as a bond because,just as with a bond,the premium represents

• A) the amount the employee loses if caught shirking.
• B) the expected value of the amount the employee loses if he shirks.
• C) the cost of monitoring the employee.
• D) the gain to the employee if he shirks.

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Definitions:

Pandemic

An epidemic of an infectious disease that has spread across a large region, for instance multiple continents or worldwide, affecting a substantial number of people.

All

A word used to refer to the whole quantity or extent of a particular group or thing.

Multidisciplinary Program

A program that involves experts from multiple fields of study working together towards a common goal.

Discipline

A branch of knowledge, typically one studied in higher education or a field of study.