Which Theory Explains the Fact That Some Firms May Choose

question 431

Multiple Choice

Which theory explains the fact that some firms may choose to pay their employees more then they would earn as determined by equilibrium in the labor market?

• A)the theory of efficiency wages
• B)the marginal-productivity theory
• C)human-capital theory
• D)signaling theory

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Definitions:

Demand Schedule

A table that shows the relationship between the price of a good and the quantity demanded.

Monopoly

A market structure dominated by a single seller, facing no competition in offering a unique product or service, allowing them to control prices and market conditions.

Network Externalities

The effect that an additional user of a good or service has on the value of that product to others, often increasing the product's value as the user base grows.

Game Console

A dedicated electronic device designed to play video games through a connection to a television or other display screen.