Efficiency-Wage Theory Suggests That Paying

question 28

Multiple Choice

Efficiency-wage theory suggests that paying

• A)low wages might be profitable because they raise the efficiency of a firm's workers.
• B)low wages might be profitable because they lower the efficiency of a firm's workers.
• C)high wages might be profitable because they raise the efficiency of a firm's workers.
• D)high wages might be profitable because they lower the efficiency of a firm's workers.

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Definitions:

Cosigner

an individual who agrees to be responsible for the repayment of a loan or debt if the primary borrower fails to pay.

Bankruptcy

A legal procedure for dealing with debt problems of individuals or businesses; officially declared inability to pay off debts.

Liable

Being legally responsible for a particular act or omission, usually involving payment of damages or compliance with specific court orders.

Suretyship

A contractual agreement in which one party (surety) guarantees the obligations of a principal to a third party.