Asked by Katelyn Nartiff on May 26, 2024
Verified
Suppose new electronic devices make it easier to monitor the effort levels of workers. If some shirking is still possible in the efficiency wage model, what happens to the efficiency wage?
A) Declines, but remains above the market-clearing wage
B) Declines, and falls below the market-clearing wage
C) Increases
D) Does not change
Efficiency Wage
A higher-than-market wage paid by employers to increase productivity and efficiency among workers by motivating them and reducing turnover.
Market-clearing Wage
The pay rate where the amount of labor offered matches the amount of labor required.
Electronic Devices
Gadgets and equipment that operate by controlling the flow of electrons or other electrically charged particles.
- Examine the repercussions of tech developments on overseeing workforce activities and how it pertains to wages based on efficiency.
- Differentiate between equilibrium wages in the market and wages that promote productivity.
Verified Answer
JR
Julisa RamosJun 01, 2024
Final Answer :
A
Explanation :
With the ability to monitor effort levels, it becomes more difficult for workers to shirk. As a result, employers may feel they can offer a slightly lower efficiency wage and still motivate workers to perform at their highest level. However, the efficiency wage would likely remain above the market-clearing wage in order to retain the benefits of reduced turnover, increased productivity, and improved morale that come with paying above what workers could earn elsewhere.
Learning Objectives
- Examine the repercussions of tech developments on overseeing workforce activities and how it pertains to wages based on efficiency.
- Differentiate between equilibrium wages in the market and wages that promote productivity.