One Efficiency-Wage Theory Implies That Firms Pay High Wages Because

question 63

Multiple Choice

One efficiency-wage theory implies that firms pay high wages because:

• A) this practice increases the problem of moral hazard.
• B) in wealthy countries, it is important to pay workers high wages to improve their health.
• C) the more a firm pays its workers, the greater their incentive to stay with the firm.
• D) paying high wages promotes adverse selection.

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Definitions:

Unpaid Leave

A period of time that an employee is allowed to be away from work without receiving pay, often used for personal, family, or medical reasons.

Eligible Employee

An employee who meets the criteria set forth by an employer or government to receive benefits or participate in programs.

Cultural Relativism

The principle that an individual's beliefs and activities should be understood by others in terms of that individual's own culture, emphasizing that no culture is superior to another.

Ethical Behavior

Acting in ways consistent with one’s personal values and the commonly held values of the organization and society.