Final answer:
A profit-sharing plan is an incentive that enhances productivity and creates additional earnings based on company profit, popular among economists and the general public, and supported by efficiency wage theory.
Step-by-step explanation:
The incentive that leads to enhanced productivity and subsequently creates additional earnings, with payment being made based on company profit, is commonly referred to as a profit-sharing plan. This approach to compensation is popular with both economists and the general public because it effectively increases the payment received for work by aligning employee interests with the financial success of the business.
Profit-sharing is designed to give workers a direct stake in the company's performance, encouraging them to work harder and more efficiently. This can create a win-win scenario where employees are more satisfied due to higher potential earnings and companies benefit from improved productivity and a stronger bottom-line. Furthermore, the application of efficiency wage theory suggests that higher wages can lead to increased productivity among employees.