. Efciencyr wage theory suggests that A) workers will be paid less than their reservation wage. B) productivity might drop if the wage rate is too low. C) the government can only set tax rates so high before people will prefer not to work. D) unskilled workers will have a lower turnover rate than skilled workers. E} firms will be more resistant to wage increases as the labor market tightens. In the wage setting relation W = P'F(u ,2}, the variable 2 does not include which of the following variables? A) the minimum wage B) unemployment benets C) the extent to which rms mark up prices over their marginal cost D} all of these E) none of these . The price setting equation is represented by the following: P = (l + m)W. When there is perfect competition, we know that It: will equal A} W. B) P. C) WfP. D) 1 E) none of these 15) An increase in the minimum wage will tend to cause which of the following? A} an upward shift in the WS curve B) a downward shift in the WS curve C) an upward shift in the PS curve D} a downward shift in the PS curve E) none of these