Efficiency wage theories claim that firms may pay high real wages in order to:
A. avoid the threat of unionization.
B. make workers more productive.
C. discourage unskilled workers from applying.
D. reduce the level of frictional unemployment.
Ans: B. make workers more productive.
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Assume that the utility function of an individual is represented as U = ?W - 0.001W; where W (his present wealth) = $250,000 . He considers investing in a gamble which would double his wealth if he wins but still leave him with $250,000 if he loses. Given that his probability of winning is 0.6, calculate his expected utility of taking the bet
a. 157 units b. 250 units c. 207.11 units d. 224.3 units
If your income increases from $10,000 per year to $14,000 per year and your tax payment increases from $2,000 to $2,840, the marginal tax rate:
A. Is 20 percent B. Is 21 percent C. Is 25 percent D. Cannot be determined from the given data