If the Cost of Monitoring Worker Effort Is High, Then

Multiple Choice

If the cost of monitoring worker effort is high, then a firm can encourage workers to work hard by paying an efficiency wage because

A) Paying an efficiency wage means a firm can monitor its workers more cheaply.
B) The efficiency wage will encourage workers to monitor each other's effort and report shirking to the employer.
C) Efficiency wages guarantee efficiency.
D) The efficiency wage will raise the cost to workers of losing their jobs, even though there may be a low risk of being dismissed for shirking.