Which Statement by an Employer Is Consistent with the Efficiency

question 53

Multiple Choice

Which statement by an employer is consistent with the efficiency wage theory?

• A)"I pay more than the going rate so that my employees work hard."
• B)"I pay only enough to attract workers who are at the bottom of the pay scale."
• C)"I love it when unemployment goes up because that drives down my wage costs."
• D)"Workers can always find jobs,if only they lower their expectations."
• E)"Unions have only their current members' interests at heart."

---

Definitions:

Quality

The degree of excellence of a product or service, often measured against specifications or standards.

MC = P

A condition in economics where marginal cost equals price, often indicating the point of profit maximization for firms.

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing for significant influence over pricing.

Product Differentiation

The process of distinguishing a product or service from others, to make it more attractive to a particular target market.