A Firm Might Choose to Pay Its Employees a Wage

question 38

Multiple Choice

A firm might choose to pay its employees a wage higher than that which would clear the market because:

• A)the higher wage raises the opportunity cost of shirking
• B)the higher wage may shift the labor demand curve to the left
• C)the firm will have higher turnover,allowing new workers to invigorate the work place
• D)the higher wage solves the free-rider problem

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