Efficiency Wage Theory & Impact on Labor Market


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question 1 of 3

Which of the following is NOT a benefit of applying the efficiency wage theory?

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1. What do we call the wage that occurs when labor supplied equals labor demanded?

2. Jeb is starting up a restaurant, and he's trying to decide how much to pay his servers. He knows that the market-clearing wage for servers is $10 per hour. According to efficiency wage theory, how much should he pay them? Why?

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About This Quiz & Worksheet

What do you know about efficiency wage theory? The quiz covers terms, advantages, and disadvantages related to this concept.

Quiz & Worksheet Goals

These assessments test your understanding of:

  • Efficiency wage theory benefits
  • The term for when available labor equals demanded labor
  • How companies pay employees under efficiency wage theory
  • Turnover rates
  • Negative impacts of efficiency wage theory

Skills Practiced

  • Knowledge application - use your understanding to explain how the turnover rate is impacted by efficiency wage theory
  • Information recall - access your knowledge regarding the drawbacks of efficiency wage theory
  • Interpreting information - verify that you can review information about how companies pay employees under this theory and interpret it correctly

Additional Learning

The lesson entitled Efficiency Wage Theory & Impact on Labor Market will help you better understand this topic. Lesson objectives include:

  • Define efficiency wage theory
  • Explain how this theory impacts employees and job training
  • Describe the relationship between efficiency wage theory and employee productivity