Answer:
Mary could increase the wages of the workers above the market rate.
Explanation:
The efficiency wage theory aims at ensuring high productivity level in a company by increasing the wages of it's employees above the market rate. It has been proved that an increase in wages transfer directly to the productivity levels of the employees. This is due to a number of reasons as show;
1. Fear of losing jobs: if Mary increases the wages of her employees above the average market rate, the employees will feel that they need to retain their job since the financial benefits they get from Mary's company is better than other companies. This improves increases their motivation to be productive, since the other alternatives are not so attractive.
2. Loyalty: an increase in the wages of employees make them feel appreciated and might want to work harder as opposed to feeling exploited in a company that pays them considerably less wages.
3. Lower costs of supervision: it has been proved that increasing the wages of employees makes them have a sense of responsibility since they feel like appreciated. The employees in such a case will need minimal supervision to carry out their duties.
4. Attract higher quality labor: a company that pays higher than the market rate will more often than note attract high quality labor as a show of gratitude for the wages.
