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6 December, 21:39

The theory of efficiency wages explains why

a. it may be in the best interest of firms to offer wages that are above the equilibrium level.

b. setting wages at the equilibrium level may increase unemployment.

c. it is efficient for firms to set wages at the equilibrium level.

d. the most efficient way to pay workers is to pay them according to their skills.

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  1. 6 December, 21:42
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    Your answer is a. it may be in the best interest of firms to offer wages that are above the equilibrium level.

    The more you pay someone above what other people are paying for the same job the more people will want to come work for you and you will have more to choose from, which means you can get better people working for you.
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