A firm installs new monitoring software that significantly increases the probability that an employee not working diligently will be detected. The firm then adjusts the employee's wage to the new, lower level that is just enough to incentivize effort. Assume the employee's disutility of effort and their next best alternative (unemployment) remain unchanged. Match each economic concept below to the resulting change.
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
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A firm installs new monitoring software that significantly increases the probability that an employee not working diligently will be detected. The firm then adjusts the employee's wage to the new, lower level that is just enough to incentivize effort. Assume the employee's disutility of effort and their next best alternative (unemployment) remain unchanged. Match each economic concept below to the resulting change.
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