The Theory of "Efficiency Wages" Suggests That a Pool of Involuntarily

question 86

Multiple Choice

The theory of "efficiency wages" suggests that a pool of involuntarily unemployed workers

• A)quickly disappears because perfectly-flexible wages eliminates this inefficient waste of resources.
• B)exists only between sessions of wage re-negotiation.
• C)is comprised solely of workers who have failed to meet the productivity standards of potential employers.
• D)is irrelevant to the behaviour of employed workers.
• E)provides an incentive for employees to work hard so they are not laid off.

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Definitions:

Quantity Supplied

The complete quantity of a product or service that sellers are ready and capable of offering for sale at a specified price point in the marketplace.

Demand

The total amount of goods or services that consumers are willing and able to purchase at various prices during a specified period.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good that consumers are willing to buy.

Price Ceiling

A government-imposed limit on how high the price of a product or service can be charged in the market, aimed at protecting consumers from high prices.