How Does the Theory of Efficiency Wages Explain Above-Equilibrium Wages

question 343

Multiple Choice

How does the theory of efficiency wages explain above-equilibrium wages?

• A) Employers are forced to pay higher wages in efficient markets.
• B) Employers give their workers a higher wage in the hope that it will lead to increased productivity.
• C) Workers get higher wages when they prove they are increasing their productivity.
• D) Workers demand higher wages to compensate for poor fringe benefits.