If an Employer Believes in the Theory of Efficiency Wages

question 133

Multiple Choice

If an employer believes in the theory of efficiency wages, he will raise wages in effort to do which of the following?

• A)increase worker effort and increase worker turnover
• B)increase worker effort and decrease worker turnover
• C)decrease worker effort and increase worker turnover
• D)decrease worker effort and decrease worker turnover

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Definitions:

Output Effect

The impact on total production and economic output resulting from changes in price levels, influencing the quantity supplied or demanded.

Marginal Physical Product

The additional output that can be produced by adding one more unit of a specific input, while holding other inputs constant.

Additional Output

The extra amount of production generated as a result of increasing inputs or improving efficiency.

Productivity

A measure of the efficiency of production, often expressed as the ratio of outputs to inputs in a production process.