Dawn Is the CEO of a Corporation That Hires Nonunion

question 170

Multiple Choice

Dawn is the CEO of a corporation that hires nonunion labour.According to the theory of efficiency wages,if she decides to pay her workers more than the competitive equilibrium wage,what is most likely to happen?

• A) The profits of her firm may increase.
• B) The higher wages will induce her workers to shirk their responsibilities.
• C) The turnover of her workers may increase.
• D) She will face a shortage of quality workers.

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Definitions:

Constant Cost

A situation where the cost of producing one additional unit of a good or service is the same, regardless of the volume produced.

Equilibrium Quantity

The quantity of goods or services supplied and demanded at the equilibrium price, where the quantity supplied equals the quantity demanded.

Equilibrium Price

The price at which the quantity of goods supplied equals the quantity of goods demanded.

Constant Cost Industry

An industry in which the costs of production, including the prices of inputs, do not change as the total output of the industry changes.