Question

Mary Ellen is the newly appointed CEO of a company that packages cereal on an assembly line. Her staff has told her that the
W/P s $6 5 4 20 30 40 0 Refer to Figure 9-1. Which of the following describes the equilibrium point in the diagram where ther
0 0
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Answer #1

Option C is correct. This is because according to the efficiency wage theory if workers are paid more than the equilibrium market wage rate they develop a sense of belonging and loyalty towards the firm and this reduces their shirking

Option A is correct because equilibrium occurs where the demand and the supply curve intersect. they are intersecting at a wage rate of $5 in this diagram which generates employment of 30 workers.

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