Efficiency-Wage Theory Suggests That to Improve Workers Performance, Firms Should

question 54

Multiple Choice

Efficiency-wage theory suggests that to improve workers performance, firms should:

• A)fire all existing workers and hire new ones
• B)spend more money and effort on monitoring
• C)raise wages above the market equilibrium level
• D)give incentive pay to employees for dobbing in their fellow workers who are shirking

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Definitions:

Mean of Production

Likely a typographic error intended to refer to "Means of Production," which are the resources (such as land, labor, and capital) used to produce goods and services.

Central Planning

An economic system where the government or a central authority makes all decisions regarding the production and distribution of goods and services.

Capitalism

An economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.

Limited

In a business context, referring to a company where the liability of its members is restricted to what they have invested or guaranteed to the company.