Asked by Nicholas Alvarez on Jul 19, 2024
Verified
An efficiency wage is higher than the equilibrium wage to motivate the employee to work hard.
Marginal Productivity
The additional output that is produced by adding one more unit of a factor of production, holding other factors constant.
Income Distribution
The way in which total income is divided among the population or different groups in an economy.
- Familiarize yourself with the idea and aim of efficiency wages, and explore how they affect unemployment levels.
Verified Answer
AM
Adrienne MichelleJul 22, 2024
Final Answer :
True
Explanation :
An efficiency wage is intentionally set higher than the equilibrium wage as an incentive for employees to work harder and perform better on the job. This approach can lead to reduced turnover, improved morale, and increased productivity.
Learning Objectives
- Familiarize yourself with the idea and aim of efficiency wages, and explore how they affect unemployment levels.