The figure depicts the efficiency wage equilibrium of a worker and a firm. According to this figure: Question 3 options: At C, the marginal rate of substitution (MRS) between higher wage cost and higher effort exceeds the marginal rate of transformation (MRT). At B, the MRS is higher than the MRT. The firm would maximise its profits by paying an hourly wage that is $6 above the worker's reservation wage. The firm is able to increase its profits from those attained at A by inducing the worker to exert higher effort in return for a higher wage