A Standard Efficiency Wage Model Pays Workers Higher Wages in Order

question 5

Multiple Choice

A standard efficiency wage model pays workers higher wages in order to increase worker efficiency. As a result, firm profits increase and there is a pool of involuntarily unemployed workers. This equilibrium comes about in part because

• A) the firm pays workers according to a tournament.
• B) workers are less likely to shirk when there is a pool of unemployed workers who are willing to take their job.
• C) the firm agrees to not replace labor with capital.
• D) workers are unaware of the pool of unemployed workers as long as they keep their job.
• E) workers will do anything to be paid a higher wage.

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Definitions:

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Rail cars designed specifically for the safe transportation of bulk liquid chemicals.