Chapter 73, Problem 4MCQ

To determine

The result of efficiency wage.

Answer to Problem 4MCQ

From the available options, the correct option is surpluses of labor.

Explanation of Solution

Surpluses of labor would be the result of efficient wages. This is because by increasing the wage rate from the market, the firm tries to retain their existing workers so that they can achieve higher productivity or avoid the situation of shortage of labor. It would increase the motivation among workers to perform their job better. However, discrimination is the unjust treatment of workers based on their gender or race. And, compensating differentials involves higher wages to employees according to the risky nature of work.

Therefore, the correct option is b (surpluses of labor).

Economics Concept Introduction

Introduction: According to the marginal productivity theory of income distribution, every individual will receive wage or income according to the total contribution or output that they produce.

The efficiency wages model describes the payment of wages above the makes wages to retain employees or to increase the productivity of the business.