Final answer:
An efficiency wage is exemplified by an above-equilibrium wage offered by a firm to attract a talented pool of job applicants. It increases productivity and reduces turnover.
Step-by-step explanation:
An example of an efficiency wage is an above-equilibrium wage offered by a firm to attract a more talented pool of job applicants. The efficiency wage theory suggests that by paying a higher wage, employers can increase workers' productivity.
This strategy not only motivates employees to work harder because of the higher pay compared to the market rate but also promotes employee loyalty and reduces the likelihood of turnover, which can be costly for the firm due to the expenses associated with hiring and training new employees. Additionally, it is a way for firms to signal that they value their employees and are invested in keeping a highly skilled workforce.