Question

Buddy is the owner of a firm that bottles beer in St. Louis, Missouri. There are many other such firms in the area. Buddy decides that if he pays his workers a wage higher than the going market wage, his profits will increase. Which of the following is a likely explanation for his decision?

A. The higher the wage, the more he can charge for his beer
B. The higher the wage, the more he will have to monitor his workers for shirking.
C. The higher the wage, the lower will be the costs of obtaining needed supplies.
D. The higher the wage, the less often his workers will choose to leave his firm.

Answer 1

D. The higher the wage, the less often his workers will choose to leave his firm.

Step-by-step explanation:

The cost that it implies to keep hiring new people and training them into doing a proper job with your business if often minimum compared to what you could save by underpaying your workers, so the thing that could lead him to increase his workers wage would be to increase the loyalty they have towards the company and to keep them happy at work and not have so much employees rotation, this will lead to an increase in efficiency and higher production.