How do efficiency wages help increase a firm's profits?
What will be an ideal response?
Efficiency wages are wages offered above the wage that workers would accept, where the premium is paid to increase worker productivity. It helps increase a firm's profits in a number of ways. Some of these are:
a. Efficiency wages reduce worker turnover
b. Risk of losing a high-paying job motivates employees to work harder than they otherwise would.
c. There is a possibility that employees are grateful for receiving an above-market wage, leading them to work harder.
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Which of the following features does a customs union have?
A. Free trade among those members with similar economic policies B. Free movement of factors of production C. Harmonization of all economic policies D. Common set of external tariffs
Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. higher; potential D. lower; higher