The Theory of Efficiency Wages Asserts That

question 219

Multiple Choice

The theory of efficiency wages asserts that

• A) unions are often successful in forcing employers to pay higher wages.
• B) employers strive to hold wages below equilibrium levels.
• C) employers may find it profitable to pay above-equilibrium wages.
• D) efficient workers actually earn lower wages than those earned by inefficient workers.

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Definitions:

Numeraire

A standard unit of account in which prices and values are expressed; it serves as a measure for comparing the worth of goods or services.

Endowed

Provided with a quality, ability, or asset.

Perfect Substitutes

Goods that can be used in place of each other with no loss of utility by the consumer.

Perfect Complements

Goods that are always used together in fixed proportions, where an increase in demand for one leads to a corresponding increase in demand for the other.