Suppose That Firms Are Paying Their "Efficiency Wage" Rate and AD

question 26

Multiple Choice

Suppose that firms are paying their "efficiency wage" rate and AD shifts leftward.Firms that lower wages and maintain production would

• A)achieve lower profits since worker efficiency would fall and total wages paid increase.
• B)achieve lower profits since worker efficiency would fall and wages per unit of output increase.
• C)achieve higher profits.
• D)achieve lower per unit wage costs.

---

Definitions:

Taxes

Mandatory financial charges or levies imposed by a government on individuals or entities to fund public expenditures.

Taxing Entities

Governments or jurisdictions with the authority to impose taxes on individuals, corporations, property, or transactions.

Merchandising Business

A business that buys goods in a ready-to-sell form and earns revenue by selling these goods to customers.

Products

Items or services that are created or provided by a business for sale to customers.