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How Does the Theory of Efficiency Wages Explain Above-Equilibrium Wages

Question 7

Multiple Choice

How does the theory of efficiency wages explain above-equilibrium wages


A) Employers are forced to pay higher wages in efficient markets.
B) Employers give their workers a higher wage in the hope that it will lead to increased productivity.
C) Workers get a raise in wage when they prove they are increasing their productivity.
D) Workers demand higher wages to compensate for poor fringe benefits.

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