Question

Which of the following is an example of an efficiency wage?

a.an addition the government makes to some workers' wages in order to reduce poverty
b.an equilibrium wage paid to workers who work part time and so are exempt from the minimum wage
c.paying higher wages to workers doing dangerous tasks
d.an above equilibrium wage paid to workers to reduce shirking

Answer 1

Paying higher wages to workers doing dangerous tasks is an example of an efficiency wage.

Step-by-step explanation:

An example of an efficiency wage is d. paying higher wages to workers doing dangerous tasks. Efficiency wage theory argues that workers' productivity depends on their pay, so employers may choose to pay workers more than market conditions dictate in order to motivate them to work harder and to stay with the current employer. Paying higher wages to workers doing dangerous tasks is an example of this, as it incentivizes them to continue taking on risky tasks while reducing turnover and the cost of hiring and training new workers.