The Following Figure Gives the Total Product of Labor at Different

Essay

The following figure gives the total product of labor at different levels of labor use per day.The market price of the product is $10 per unit and the market wage rate is $8 per day.

$$\begin{array} { c | c } \begin{array} { l } \text { Labor } \\\text { Employed }\end{array} & \begin{array} { l } \text { Total Product } \\\text { (in units) }\end{array} \\\hline 4 & 17 \\5 & 20 \\6 & 25 \\7 & 28 \\8 & 30\end{array}$$
-Explain the significance of efficiency wages in solving the principal/agent relationship in employment.