The Efficiency-Wage Theory of Worker Quality Suggests That If Firms

question 286

Multiple Choice

The efficiency-wage theory of worker quality suggests that if firms respond to a surplus of labor by reducing the wage,then

• A) the most competent applicants will likely apply for that firm's jobs.
• B) the most competent applicants will likely not apply for that firm's jobs.
• C) unemployment will increase.
• D) the quality of the firm's work force will increase.

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Definitions:

Import-Substitution Strategy

An economic policy aimed at reducing foreign dependency by local production of industrialized products.

Capital Available

The amount of financial resources a company or individual has available for investment or spending purposes.

Unionized Labor Force

A workforce that is organized into trade unions, which collectively negotiate wages, work hours, and working conditions.

Labor Productivity

Labor productivity measures the output of goods and services produced per unit of labor input, indicating the efficiency of labor use in the production process.