Above-equilibrium wages paid by some employers as an incentive for better performance are called:

A) efficiency wages.
B) market power wages.
C) compensating differentials.
D) discrimination.

Question

Above-equilibrium wages paid by some employers as an incentive for better performance are called:A) efficiency wages.B) market power wages.C) compensating differentials.D) discrimination.

Andrea Scheide · Accepted Answer

Final Answer : A, Explanation :  Efficiency wages are wages that are higher than the market equilibrium wage paid by some employers as an incentive for their employees to work harder, be more productive, and reduce turnover. The idea behind efficiency wages is that employees who are paid more than the market wage will feel more valued, and, as a result, will work harder and be more committed to their jobs. This, in turn, can lead to lower turnover costs, higher productivity, and ultimately higher profits for the employer.

Above-equilibrium wages paid by some employers as an incentive for better performance are called:

A) efficiency wages.
B) market power wages.
C) compensating differentials.
D) discrimination.

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