A Firm Uses an Efficiency Wage Scheme to Deter Workers

question 56

Multiple Choice

A firm uses an efficiency wage scheme to deter workers from shirking,which is detected 10% of the times.Suppose a risk-neutral worker that has a reservation wage of $500.The efficiency wage paid by this firm is $7,000.What is the industry ongoing wage?

• A) $1,000
• B) $5,000
• C) $1,500
• D) $2,000

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Definitions:

Generalizing Findings

the process of applying the results or conclusions from a specific study to larger populations or different contexts beyond the original scope of the research.

Internal Validity

The degree to which the changes in the dependent variable of an experiment are a result of the manipulation of the independent variable. If no alternative explanations are possible, the experiment has strong internal validity.

External Validity

The generalizability of the findings in an investigation, or the degree to which the findings apply to other individuals in other settings.