Suppose a Start-Up Company Can Operate from a Traditional Office

Multiple Choice

Suppose a start-up company can operate from a traditional office space or from a virtual office in which there is no physical office location and the employees collaborate over internet connections from their individual homes. Shirking is more difficult to monitor under the virtual office plan. How would the efficiency wage and level of employment for the virtual office compare to the traditional office plan?

A) Efficiency wage and employment are higher.
B) Efficiency wage is lower, employment is higher.
C) Efficiency wage is higher, employment is lower.
D) Efficiency wage and employment are lower.