If Firms Offer an Efficiency Wage

question 116

Multiple Choice

If firms offer an efficiency wage:

• A)​the quantity of labor supplied will exceed the quantity of labor demanded.
• B)​the quantity of labor demanded will exceed the quantity of labor supplied.
• C)​the quantity of labor supplied will equal the quantity of labor demanded.
• D)​absenteeism is expected to increase.

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Definitions:

Aggregate Demand

Unified request for the provision of goods and services in an economy, calculated at a specific scale of overall price for a given duration.

Aggregate Supply

The total supply of goods and services that firms in an economy are willing and able to sell at a given price level in a specific time period.

Long Run Aggregate-Supply

In economics, it represents the total quantity of goods and services that producers in an economy are willing and able to supply at a full employment level, regardless of the price level, over a long period.

Long-Run Equilibrium

A state in which all factors of production are optimally allocated, and firms in a competitive market have no incentive to change their output level or enter/exit the industry.