Which Theory Explains the Fact That Some Firms May Choose

question 110

Multiple Choice

Which theory explains the fact that some firms may choose to pay their employees more than they would earn as determined by equilibrium in the labour market

• A)theory of efficiency wages
• B)marginal-productivity theory
• C)human-capital theory
• D)signalling theory

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Definitions:

Conditional Sale Agreement

A contract in which the sale is contingent upon certain conditions, typically used in real estate and high-value purchases.

Cash Price

The amount of money required to purchase an item or service outright without financing.

Compounded Quarterly

Refers to the process of calculating interest on an investment or loan where the interest is added to the principal amount four times a year.

Interest

Money paid at a particular rate for the use of borrowed funds or for delaying the repayment of a debt.