Question 1

Efficiency-wage theory suggests that paying

Accepted Answer

A)  low wages might be profitable because they raise the efficiency of a firm's workers.
B)  low wages might be profitable because they lower the efficiency of a firm's workers.
C)  high wages might be profitable because they raise the efficiency of a firm's workers.
D)  high wages might be profitable because they lower the efficiency of a firm's workers.E) C) and D)
F) A) and B)

Question 2

According to the theory of efficiency wages,if a firm stops paying efficiency wages it is likely to see a(n)

Accepted Answer

A)  increase in the number of job applicants and an increase in how long workers stay on the job.
B)  increase in the number of job applicants and a decrease in how long workers stay on the job.
C)  decrease in the number of job applicants and an increase in how long workers stay on the job.
D)  decrease in the number of job applicants and a decrease in how long workers stay on the job.E) All of the above
F) B) and D)

Question 3

Three employers have justified their actions as follows.Whose logic is not consistent with the logic of efficiency wage theory?

Accepted Answer

A)  Instead of spending money on an electronic timing system that monitors worker hours,Tom spends an equivalent amount of money on higher wages.
B)  Dick pays his workers less than the equilibrium wage so that they will not have the time or money to look for work somewhere else.
C)  Harry pays his workers in a developing country more than the going wage hoping that they will get a better diet and so be more productive.
D)  None of the above is consistent with the logic of efficiency wage theory.E) None of the above
F) B) and D)

Question 4

Which of the following causes of unemployment is associated with a wage rate above the market equilibrium level?

Accepted Answer

A)  minimum-wage laws
B)  unions
C)  efficiency wages
D)  All of the above are correct.E) None of the above
F) A) and D)

Question 5

The theory of efficiency wages explains why

Accepted Answer

A)  setting wages at the equilibrium level may increase unemployment.
B)  it may be in the best interest of firms to offer wages that are above the equilibrium level.
C)  the most efficient way to pay workers is to pay them according to their skills.
D)  it is efficient for firms to set wages at the equilibrium level.E) None of the above
F) A) and D)

Question 6

Which of the following is an example of an efficiency wage?

Accepted Answer

A)  an addition the government makes to some workers' wages in order to reduce poverty
B)  an equilibrium wage paid to workers who work part time and so are exempt from the minimum wage
C)  paying higher wages to workers doing dangerous tasks
D)  an above equilibrium wage paid to workers to reduce shirkingE) A) and B)
F) None of the above

Question 7

Wages set above the equilibrium wage by

Accepted Answer

A)  firms to increase morale are called collective bargaining wages.
B)  lawmakers to decrease cyclical unemployment are called minimum wages laws.
C)  firms to increase productivity are called efficiency wages.
D)  lawmakers to decrease the length of a job search are called efficiency wages.E) C) and D)
F) B) and C)

Question 8

Efficiency wages

Accepted Answer

A)  increase frictional unemployment by keeping wages above equilibrium.
B)  decrease frictional unemployment by keeping wages at equilibrium.
C)  increase structural unemployment by keeping wages above equilibrium.
D)  decrease structural unemployment by keeping wages at equilibrium.E) B) and D)
F) All of the above

Question 9

Minimum-wage laws

Accepted Answer

A)  create frictional unemployment,while firms paying wages above equilibrium to reduce worker turnover creates structural unemployment.
B)  create structural unemployment,while firms paying wages above equilibrium to reduce worker turnover creates frictional unemployment.
C)  and firms paying wages above equilibrium to reduce worker turnover both create structural unemployment.
D)  and firms paying wages above equilibrium to reduce worker turnover both create frictional unemployment.E) A) and C)
F) B) and D)

Question 10

Michael decides to hire some additional workers for his roofing company.The equilibrium wage is $17 per hour.Efficiency wage theory suggests that it is reasonable for Michael to offer

Accepted Answer

A)  $17 per hour.
B)  less than $17 per hour because some people would be willing to work for less.
C)  less than $17 an hour to prevent shirking.
D)  more than $17 per hour in order to attract a better pool of applicants.E) All of the above
F) A) and B)

Question 11

Minimum-wage laws,unions,and efficiency wages contribute to

Accepted Answer

A)  both structural unemployment and the natural rate of unemployment.
B)  neither structural unemployment nor the natural rate of unemployment.
C)  structural unemployment,but not the natural rate of unemployment.
D)  the natural rate of unemployment,but not structural unemployment.E) A) and B)
F) A) and C)

Question 12

The efficiency-wage theory of worker health is

Accepted Answer

A)  more relevant for explaining unemployment in less developed countries than in rich countries.
B)  more relevant for explaining unemployment in rich countries than in less developed countries.
C)  equally relevant for explaining unemployment in less developed countries and in rich countries.
D)  not relevant for explaining unemployment.E) C) and D)
F) None of the above

Question 13

Emeril is the owner of a restaurant.He decides to raise the wages of his workers even though he faces an excess supply of labor.His decision

Accepted Answer

A)  might increase profits if it attracts a better pool of workers to apply for jobs at his restaurant.
B)  will reduce the excess supply of labor.
C)  is an example of the benefits of a minimum-wage law.
D)  All of the above are correct.E) A) and B)
F) None of the above

Question 14

Which of the following is not a reason economies experience structural unemployment?

Accepted Answer

A)  job search
B)  unions
C)  minimum-wage laws
D)  efficiency wagesE) A) and B)
F) A) and C)

Question 15

Efficiency wages

Accepted Answer

A)  raise the productivity of a firm's workers,so the firm hires more workers.
B)  raise the productivity of a firm's workers,so the firm hires fewer workers.
C)  reduce the productivity of a firms' workers,so the firm hires more workers.
D)  reduce the productivity of a firm's workers,so the firm hires fewer workers.E) All of the above
F) A) and B)

Question 16

Susan is a plant manager in charge of a factory in a relatively poor country.Even though market wages are low,she decides to raise the wages of her workers.Her decision

Accepted Answer

A)  might increase profits if it means that the wage is high enough for her workers to eat a nutritious diet that makes them more productive.
B)  will help eliminate the excess supply of labor.
C)  may cause her workers to reduce the effort they expend at their jobs.
D)  All of the above are correct.E) B) and D)
F) All of the above

Question 17

The theory of efficiency wages provides a possible explanation as to why

Accepted Answer

A)  workers form unions.
B)  firms should try to reduce surpluses of labor.
C)  firms may be inclined to keep their workers' wages above the equilibrium level.
D)  firms may be inclined to keep their workers' wages below the equilibrium level.E) A) and D)
F) C) and D)

Question 18

Suppose that efficiency wages become more common in the economy.Imposing efficiency wages

Accepted Answer

A)  increases the quantity demanded and decreases the quantity supplied of labor.
B)  decreases the quantity demanded and increases the quantity supplied of labor.
C)  increases the quantity demanded and decreases the quantity supplied of labor
D)  decreases the quantity demanded and increases the quantity supplied of laborE) A) and C)
F) A) and D)

Question 19

Which of the following causes of unemployment is not associated with a wage rate above the market equilibrium level?

Accepted Answer

A)  efficiency wages
B)  job search
C)  minimum-wage laws
D)  unionsE) B) and D)
F) B) and C)

Question 20

The efficiency-wage theory of worker turnover suggests that firms with higher turnover will have

Accepted Answer

A)  higher production costs and higher profits.
B)  higher production costs and lower profits.
C)  lower production costs and higher profits.
D)  lower production costs and lower profits.E) None of the above
F) A) and B)

Exam 15: Unemployment: The Theory of Efficiency Wages

Efficiency-wage theory suggests that paying

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Efficiency wages

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Minimum-wage laws,unions,and efficiency wages contribute to

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Which of the following is not a reason economies experience structural unemployment?

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The efficiency-wage theory of worker health is

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Suppose that efficiency wages become more common in the economy.Imposing efficiency wages

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Efficiency wages

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Three employers have justified their actions as follows.Whose logic is not consistent with the logic of efficiency wage theory?

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The efficiency-wage theory of worker turnover suggests that firms with higher turnover will have

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The theory of efficiency wages explains why

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Minimum-wage laws

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Wages set above the equilibrium wage by

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Which of the following causes of unemployment is not associated with a wage rate above the market equilibrium level?

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Emeril is the owner of a restaurant.He decides to raise the wages of his workers even though he faces an excess supply of labor.His decision

Correct AnswerverifiedShow Answer

Michael decides to hire some additional workers for his roofing company.The equilibrium wage is $17 per hour.Efficiency wage theory suggests that it is reasonable for Michael to offer

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The theory of efficiency wages provides a possible explanation as to why

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Which of the following causes of unemployment is associated with a wage rate above the market equilibrium level?

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Which of the following is an example of an efficiency wage?

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According to the theory of efficiency wages,if a firm stops paying efficiency wages it is likely to see a(n)

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Susan is a plant manager in charge of a factory in a relatively poor country.Even though market wages are low,she decides to raise the wages of her workers.Her decision

Correct AnswerverifiedShow Answer

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