fficiency wages, minimum-wage laws, and unions all keep wages a. below the equilibrium level, causing a shortage of labor. b. below the equilibrium level, causing a surplus of labor. c. above the equilibrium level, causing a shortage of labor. d. above the equilibrium level, causing a surplus of labor.

Question

Makenna Collier

Business

15 August, 18:05

fficiency wages, minimum-wage laws, and unions all keep wages a. below the equilibrium level, causing a shortage of labor. b. below the equilibrium level, causing a surplus of labor. c. above the equilibrium level, causing a shortage of labor. d. above the equilibrium level, causing a surplus of labor.

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Butterfinger · Answer 1

d. above the equilibrium level, causing a surplus of labor.

Explanation:

Market wage equilibrium refers to the ideal wage rate where the labor supply and demand curves intersect. At equilibrium wage, the benefits derived from an extra worker equals the cost associated with the additional worker.

The efficiency wage theory advocates for higher wages to motivate employees to increase production. Minimum wage laws and trades unions negotiate for higher wages above the equilibrium rate. Trade unions will fight to keep the maximum number of employees or their members in employment.