QUESTION 2 Firms sometimes pay wages above the market clearing level thus creati
ID: 1157989 • Letter: Q
Question
QUESTION 2 Firms sometimes pay wages above the market clearing level thus creating structural unemployment. According to efficiency wage theory, the reason firms might do this can be any of the following EXCEPT Paying higher wages reduces labor turnover Higher wages can attract higher quality workers to the firm Paying higher wages is the socially responsible thing to do Higher wages imply better nutrition and thus more productive workers QUESTION 3 In an economy with no technology growth, if the depreciation rate increases this will increase the growth rate of output per worker in the short run but not in the long run decrease the growth rate of output per worker both in the short runand in the long run increase the growth rate of output per worker both in the short run and in the long run decrease the growth rate of output per worker in the short run but not in the long runExplanation / Answer
Ans 2)
Options 1,2 and 4 all are correct and valid here except option 3 as it is may or may not be confirmed that this is correct thing to do to increase social welfare
JHence option C is correct response
Ans 3)
As depreciation rate inceases change in kapital per labour is higher for short term but it improves in long run
Hence option D is correct response