Final answer:
According to efficiency wage theory, a low wage premium over the reservation wage would be expected when unemployment is high, when workers have few job alternatives, when monitoring is easy, or when the job requires little training. So the correct answer is A.
Step-by-step explanation:
If efficiency wage theory is valid, we would expect a relatively low premium over the reservation wage when:
- Unemployment rate (u) is high.
- Workers have few other options for employment in the area.
- Workers can be easily monitored.
- The job requires very little training.
- All of the above conditions apply.
The efficiency wage theory suggests that workers' productivity is positively correlated with their pay. Employers may pay more than the market wage, even in the presence of high unemployment or when workers have few alternatives, to maintain employee motivation and productivity.
However, in situations where employees can be easily monitored or where minimal training is needed, the incentive for employers to pay this efficiency wage premium may be lessened, leading to the expectation of a lower premium over the reservation wage.