The Efficiency Wage Model Contains the Assumption That Labor Productivity

question 185

Multiple Choice

The efficiency wage model contains the assumption that labor productivity __________ the wage rate,so that a firm maximizing its profits __________ pay workers an above-market wage rate.

• A) is independent of; may
• B) is independent of; will never
• C) depends on; may
• D) depends on; will never

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Definitions:

Equilibrium Price

The price at which the quantity of a good or service supplied equals the quantity demanded in a market, leading to market stability.

Bluetooth Headsets

Wireless earpieces that use Bluetooth technology to connect to various devices, enabling hands-free calling or listening to music.

Complements

refers to goods or services that are used together, where an increase in the price of one leads to a decrease in the demand for the other.

Substitutes

Goods or services that can be used in place of each other, where an increase in the price of one leads to an increase in the demand for the other.