Three employers have justified their actions as follows. Whose logic is not consistent with the logic of efficiency wage theory?
a. Instead of spending money on an electronic timing system that monitors worker hours, Tom spends an equivalent amount of money on higher wages.
b. Dick pays his workers less than the equilibrium wage so that they will not have the time or money to look for work somewhere else.
c. Harry pays his workers in a developing country more than the going wage hoping that they will get a better diet and so be more productive.
d. None of the above is consistent with the logic of efficiency wage theory.
b
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Suppose a monopolist and a perfectly competitive firm have the same cost curves. The monopolistic firm would:
A. charge a lower price than the perfectly competitive firm. B. charge a higher price than the perfectly competitive firm. C. charge the same price as the perfectly competitive firm. D. refuse to operate in the short run unless an economic profit could be made.
When the government borrows from the public, the result is
A. a decrease in unemployment. B. an increase in real GDP. C. downward pressure on interest rates. D. an increase in the demand for loanable funds.