Mary Ellen is the newly appointed CEO of a company that packages cereal on an assembly line. Her staff has told her that the output the firm produces, given the number of workers employed, indicates that some workers may be shirking. According to efficiency wage theory, what should she do?

Question

Accepted Answer

pay all workers more than the equilibrium wage rate

Answer

pay all workers below the equilibrium wage rate to make up for the loss from shirking

Answer

reduce production

Answer

make sure that workers are getting paid exactly the equilibrium wage rate

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Mary Ellen is the newly appointed CEO of a company that packages cereal on an as...

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