Efficiency Wage Theory Suggests That

question 7

Multiple Choice

Efficiency wage theory suggests that

• A)workers will be paid less than their reservation wage.
• B)productivity might drop if the wage rate is too low.
• C)the government can only set tax rates so high before people will prefer not to work.
• D)unskilled workers will have a lower turnover rate than skilled workers.
• E) firms will be more resistant to wage increases as the labor market tightens.

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Definitions:

Offeree

The party to whom an offer is made in a transaction or agreement.

Offeror

The party in a contract negotiation who makes a proposal or offer to another party for entering into an agreement.

Offeree

The person to whom an offer is made, typically in the context of contracts, where the offeree can accept, reject, or counteroffer.

Present Intent

The current intention to perform an act or claim a legal right.