posted by Bryan on .
I have an lazy instructor using test bank questions unrelated to my text and need some help. The second question is "anything that makes the efficiency wage rise relative to the market-clearing wage will...A) increase both the quantity demanded and the quantity supplied of labor. B)decrease both the quantity demanded and quantity supplied of labor. C)increase the quantity demanded and decrease the quantity supplied of labor. D)decrease the quantity demanded and increase the quantity supplied of labor.
I think C.
Now the might sound straight-forward but my textbook does not explain efficiency wage that way. It states efficiency wages = above-equilibrium wages paid by firms to increase worker productivity. Nothing about supply & demand. HELP before I jump from the roof!