Use the following statements to answer this question: I. Efficiency wage theory was developed to help explain persistent unemployment and wage discrimination in labor markets.
II) Efficiency wage theory recognizes that labor productivity may be affected by the wage rate.

A) I and II are true.
B) I is true and II is false.
C) II is true and I is false.
D) I and II are false.

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Veronica Gunnels · Accepted Answer

Final Answer : A, Explanation :  Efficiency wage theory was indeed developed to explain the persistence of unemployment and wage discrimination in labor markets. Additionally, the theory recognizes that there may be a positive relationship between wages and labor productivity, as higher wages may motivate workers to work harder and reduce turnover. Therefore, both statements I and II are true.

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