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Author Question: Efficiency wage theory suggests that firms may hold wages above the market clearing rate because (Read 99 times)

Frost2351

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Question 1

Refer to the information provided in Figure 28.2 below to answer the question(s) that follow.





Refer to Figure 28.2. If this firm pays the efficient wage of $9


◦ the firm's demand for labor will decrease until $9 is also the equilibrium wage.
◦ the supply of labor will increase until $9 is also the equilibrium wage.
◦ there will be an excess demand for labor of 3,000.
◦ there will be an excess supply of labor of 3,000.

Question 2

Efficiency wage theory suggests that firms may hold wages above the market clearing rate because


◦ they believe that the productivity of workers increases with the wage rate.
◦ unspoken agreements between workers and firms are in place.
◦ it is required by law that they do so.
◦ long-term contracts fix wage rates for a period of one to three years.


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Marked as best answer by Frost2351 on Apr 19, 2019

sylvia

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sylvia

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