Question

Assume that company ABC is an advocate of efficiency wage theory. What does efficiency wage theory suggest and how does it affect the unemployment level?

    Due to recent spike in numbers of accidents involving workers’ health and safety in the construction industry particularly under company ABC, a union is established in the construction industry, the establishment of the union on construction industry will lead to unemployment.


1)     Assume that company ABC is an advocate of efficiency wage theory. What does efficiency wage theory suggest and how does it affect the unemployment level?


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