Explain the efficiency wage theory
What will be an ideal response?
The efficiency wage theory says that firms may offer above market wages with the goal of increasing labor productivity. Labor productivity would increase if the higher wage reduced turnover, attracted more productive workers, and encouraged current workers to work harder so they won't lose their jobs.
Economics
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Q.E.
What will be an ideal response?
Economics
A firm uses two inputs, labor (L) and capital (K) in the production of umbrellas. It can invest $50,000 in the purchase of the two inputs annually. The firm hires 5 units of capital at $1,000 per unit. If the going annual wage rate is $4,500, calculate the number of workers employed by the firm. (Assume that the firm spends the entire budget on K and L.)
a. 10 b. 5 c. 15 d. 9
Economics