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Why might a firm like hitek want to pay efficiency wages

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Reference no: EM13234698

Suppose that the labor market is segmented into two industries: SlowGo and HiTek. Initially, both markets are in equilibrium and the same real wage clears in both markets. Managers learn the GWMacro consulting team about efficiency wages.

a. Define Efficiency wages
b. Why might a firm like HiTek want to pay efficiency wages?
c. If they started to do so, what would happen to their mark-up and profits?
d. What do you think would happen to employment and unemployment in the economy?

Reference no: EM13234698

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