Efficiency Wage Theory Suggests That

Multiple Choice

Efficiency wage theory suggests that

A) workers will be paid less than their reservation wage.
B) productivity might drop if the wage rate is too low.
C) the government can only set tax rates so high before people will prefer not to work.
D) unskilled workers will have a lower turnover rate than skilled workers.
E) firms will be more resistant to wage increases as the labor market tightens.