A Firm Uses an Efficiency Wage Scheme to Deter Workers

question 101

Multiple Choice

A firm uses an efficiency wage scheme to deter workers from shirking.Suppose a risk-neutral worker that has a reservation wage of $1000.The industry ongoing wage is $2,000.The efficiency wage paid by this firm is $7,000.What is this firm's shirking detection rate?

• A) 5%
• B) 20%
• C) 10%
• D) 25%

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Definitions:

Revenues

The total amount of money received by a company for goods sold or services provided during a certain period of time.

Fraction

A mathematical formula that signifies dividing one value by another.

Decimal Places

Decimal places refer to the digits that appear after the decimal point in a numerical value, representing fractions of a whole.

LCD Television

A television display technology based on liquid crystal display, which uses liquid crystals to produce images.