Asked by Sichen Zhang on Jun 08, 2024
Verified
According to the theory of efficiency wages, firms operate more efficiently if wages are below the equilibrium level.
Efficiency Wages
Efficiency wages are above-market wages paid by firms to increase worker productivity.
Equilibrium Level
The state in a market where supply equals demand, resulting in stable prices and quantities where no economic forces are unbalanced.
- Master the understanding of efficiency wages and their critical role in diminishing shirking and lowering turnover in firms.
Verified Answer
MZ
Maoting ZhongJun 11, 2024
Final Answer :
False
Explanation :
The theory of efficiency wages suggests that firms can operate more efficiently if they pay wages above the equilibrium level, as this can lead to increased productivity, lower turnover, and better quality employees.
Learning Objectives
- Master the understanding of efficiency wages and their critical role in diminishing shirking and lowering turnover in firms.