"Efficiency Wages" Are Said to Exist When Wages Are

question 98

Multiple Choice

"Efficiency wages" are said to exist when wages are

• A)such that cyclical unemployment is zero.
• B)such that the NAIRU is zero.
• C)high enough above market levels that workers increase their productivity.
• D)equal to the market wage.
• E)just high enough to induce a worker to take a job.

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Definitions:

Utility Maximizing

A concept in economics that refers to the idea that individuals choose to allocate their resources in a way that maximizes their utility or satisfaction.

Wage Increase

An upsurge in the rate of pay employees receive for their labor, typically expressed as a percentage increase over current wages.

Substitution Effect

The change in consumption patterns due to a price change, leading consumers to substitute one product for another.

Wage Decrease

A reduction in the hourly, daily, or monthly compensation that workers receive for their labor.