Why would a firm pay efficiency wages?
What will be an ideal response?
An efficiency wage is a wage that is higher than the market wage. Firms pay efficiency wages to raise productivity. Studies show that workers are motivated to work harder if they are paid higher wages. Put differently, a firm does not monitor workers as closely in order to get them to be more productive. The higher wage motivates them to be productive.
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Suppose new electronic devices make it easier to monitor the effort levels of workers. What happens to the NSC curve in the efficiency wage model?
A) Shifts upward B) Shifts downward C) Remains the same D) The NSC curve remains the same, and the labor supply curve shifts leftward because shirking workers will leave the labor force.
When determining whether a family's income is below the official poverty rate, non-cash benefits from the government, such as food stamps, housing and medical benefits, are also included
a. True b. False Indicate whether the statement is true or false