Which Theory Explains the Fact That Some Firms May Choose

question 184

Multiple Choice

Which theory explains the fact that some firms may choose to pay their employees more than they would normally earn?

• A)human capital theory
• B)signalling theory
• C)the theory of efficiency wages
• D)the efficient market hypothesis

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Definitions:

MRP

Marginal Revenue Product, the additional revenue generated from using one more unit of a factor of production.

Rent

Payment made periodically by a tenant to a landlord in exchange for the use of land, a building, or another property.

MRP

The additional revenue produced by increasing one unit of a production input, emphasizing the productivity aspect in revenue generation.

Factor of Production

Resources used in the creation of goods or services, commonly categorized into land, labor, capital, and entrepreneurship.