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Briefly describe the efficiency wage€ theory. Explain why a firm would want to pay a wage that is higher than the market wage rate. What theories can motivate such a practice?

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Joshua Stredder
Joshua StredderLv10
28 Sep 2019

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Related questions

A monopsonist has a rising MRC curve. Why? It pays a wage lower than the competitive wage. Why? A union and a monopsonist comprise a bilateral monopoly. Why would a worker prefer to be in a union in such a situation? Why might firms voluntarily pay a wage greater than the competitive (market clearing) wage?

1.The market supply curve for labor is upward-sloping because

a) As the wage rises, most workers want to work fewer hours.

b) As the wage falls, most workers want to work more hours.

c) As the wage rises, most workers are willing to work more hours.

d) For most workers, as the wage rises, the preference for leisure time increases.

2. As marginal physical product diminishes, marginal revenue product

a) Also diminishes.

b) Is not affected.

c) Rises at a diminishing rate and eventually falls.

d) Rises.

3. For a minimum wage to have any impact on the labor market, it must be set at a level

a) Higher than the equilibrium wage

b) Higher than MPP.

c) Higher than MRP.

d) Consistent economic growth.

4. Because a union is a form of monopoly, it must be concerned about the _____ slope of the demand curve for labor.

a) Vertical

b) Horizontal

c) Downward

d) Upward

1. The market supply curve for labor is upward-sloping because

a) As the wage rises, most workers want to work fewer hours.

b) As the wage falls, most workers want to work more hours.

c) As the wage rises, most workers are willing to work more hours.

d) For most workers, as the wage rises, the preference for leisure time increases.

2. As marginal physical product diminishes, marginal revenue product

a) Also diminishes.

b) Is not affected.

c) Rises at a diminishing rate and eventually falls.

d) Rises.

3. For a minimum wage to have any impact on the labor market, it must be set at a level

a) Higher than the equilibrium wage.

b) Higher than MPP.

c) Higher than MRP.

d) Consistent with economic growth.

4. Because a union is a form of monopoly, it must be concerned about the ________ slope of the demand curve for labor.

a) Vertical

b) Horizontal

c) Downward

d) Upward

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