How Does the Theory of Efficiency Wages Explain Above-Equilibrium Wages

question 343

Multiple Choice

How does the theory of efficiency wages explain above-equilibrium wages?

• A) Employers are forced to pay higher wages in efficient markets.
• B) Employers give their workers a higher wage in the hope that it will lead to increased productivity.
• C) Workers get higher wages when they prove they are increasing their productivity.
• D) Workers demand higher wages to compensate for poor fringe benefits.

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Definitions:

Concurrent Property Ownership

Ownership of property by two or more parties at the same time, where each party has an undivided interest in the whole property.

Subrogation

The legal process by which one party steps into the shoes of another party, to pursue their rights against a third party, usually in insurance claims.

Indemnity

A contractual obligation of one party to compensate the loss incurred by another party due to the acts of the indemnitor or any other party.

Incontestability Clause

A clause in insurance policies that makes the policy non-contestable after it has been in force for a certain period, except under certain conditions.