If fiRms Are Paying Efficiency Wages, They

question 139

Multiple Choice

If firms are paying efficiency wages, they

• A) may be reluctant to increase nominal wages when aggregate demand increases.
• B) are highly vulnerable to import competition.
• C) may be targeted for takeover by firms paying market wages.
• D) may be reluctant to cut wages when aggregate demand declines.

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Definitions:

Profit Margins

A financial metric indicating the percentage of revenue that exceeds the costs of goods sold, showing the profitability of a company.

Perpetual Inventory System

An accounting system that continuously updates inventory records after each purchase or sale.

Discount Period

The time frame in which a discount is offered for early payment on goods or services, often used to encourage quicker payment by customers.

Gross Profit

It's the profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.