Multiple Choice
Which of the following is a plausible explanation for a firm paying above-equilibrium wages to its workers?
A) It increases the probability that a worker who shirks will be caught.
B) It discourages workers from shirking out of fear of losing their high-paying job.
C) The Condorcet Paradox suggests that paying high wages will result in greater effort by employees.
D) By paying a high wage, employers solve this adverse selection problem and motivate the employees to work harder.
Correct Answer:
Verified
Correct Answer:
Verified
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