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According to the Theory of Efficiency Wages, It May Be

question 143

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According to the theory of efficiency wages, it may be profitable for firms to keep wages high even in the presence of a surplus of labor.


Definitions:

Benefit

An advantage or profit gained from something.

Excludable

A characteristic of a good or service that allows its owner to prevent others from using it without paying for it.

Free Rider

A person who receives the benefit of a good but avoids paying for it

Free-Rider

An individual who benefits from resources, goods, or services without paying for the cost of the benefit.

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