Question

he theory of efficiency wages provides a possible explanation as to why Group of answer choices workers form unions. firms should try to reduce surpluses of labor. firms may be inclined to keep their workers’ wages above the equilibrium level. firms may be inclined to keep their workers’ wages below the equilibrium level.

Answer 1

Firms may be inclined to keep their workers’ wages above the equilibrium level.

Step-by-step explanation:

The efficiency wage theory states that if an employer increases the wage of his/her employees, they will be motivated and their productivity will increase. The increase in productivity should offset the increased labor costs. So the costs of higher wages should be recouped through increased productivity. Higher wages also reduce worker turnover, reducing hiring and training costs.