Question

Efficiency-wage theory suggests that paying a. high wages might be profitable because they lower the efficiency of a firm’s workers. b. high wages might be profitable because they raise the efficiency of a firm’s workers. c. low wages might be profitable because they raise the efficiency of a firm’s workers. d. low wages might be profitable because they lower the efficiency of a firm’s workers.

Answer 1

Answer: Option B

Step-by-step explanation: In simple words, efficiency theory states that direct monetary benefit is the best motivator for the worker and if the employer pays high wage then the worker will definitely work more efficiently.

It further states that higher wage will be covered by the extra benefit that the worker will provide with his or her performance.

Thus, the correct option is B.