Definition of Efficiency Wage

Efficiency Wage

wage that maximizes profits.

Capital market efficiency

Reflects the relative amount of wealth wasted in making transactions. An efficient
capital market allows the transfer of assets with little wealth loss. See: efficient market hypothesis.

Efficiency

Reflects the amount of wasted energy.

External efficiency

Related: pricing efficiency.

Informational efficiency

The speed and accuracy with which prices reflect new information.

Marketplace price efficiency

The degree to which the prices of assets reflect the available marketplace
information. Marketplace price efficiency is sometimes estimated as the difficulty faced by active
management of earning a greater return than passive management would, after adjusting for the risk
associated with a strategy and the transactions costs associated with implementing a strategy.

Pricing efficiency

Also called external efficiency, a market characteristic where prices at all times fully
reflect all available information that is relevant to the valuation of securities.

Semi-strong form efficiency

A form of pricing efficiency where the price of the security fully reflects all
public information (including, but not limited to, historical price and trading patterns). Compare weak form
efficiency and strong form efficiency.

Strong-form efficiency

Pricing efficiency, where the price of a, security reflects all information, whether or
not it is publicly available. Related: Weak form efficiency, semi strong form efficiency

Weak form efficiency

A form of pricing efficiency where the price of the security reflects the past price and
trading history of the security. In such a market, security prices follow a random walk. Related: Semistrong
form efficiency, strong form efficiency.

Wage expense

The amount paid to employees for services rendered; synonymous with salary expense and payroll expense.

efficiency

a measure of the degree to which tasks were performed
to produce the best yield at the lowest cost from
the resources available; the degree to which a satisfactory
relationship of outputs to inputs occurs

labor efficiency variance

the number of hours actually worked minus the standard hours allowed for the production
achieved multiplied by the standard rate to establish
a value for efficiency (favorable) or inefficiency (unfavorable)
of the work force

manufacturing cycle efficiency (MCE)

a ratio resulting from dividing the actual production time by total lead time;
reflects the proportion of lead time that is value-added

overhead efficiency variance

the difference between total budgeted overhead at actual hours and total budgeted
overhead at standard hours allowed for the production
achieved; it is computed as part of a three-variance analysis;
it is the same as variable overhead efficiency variance

variable overhead efficiency variance

the difference between budgeted variable overhead based on actual input activity and variable overhead applied to production

Labor efficiency variance

The difference between the amount of time that was budgeted
to be used by the direct labor staff and the amount actually used, multiplied
by the standard labor rate per hour.

semi-strong-form efficiency

Market prices reflect all publicly available information.

strong-form efficiency

Market prices rapidly reflect all information that could in principle be used to determine true value.

weak-form efficiency

Market prices rapidly reflect all information contained in the history of past prices.

Efficiency

The ability to produce the things most wanted at the least cost.

Market Efficiency

See efficiency.

Real Wage

wage expressed in base-year dollars, calculated by dividing the money wage by a price index.

Wage Flexibility

Ease with which wages adjust in response to excess supply or demand.

Wage/Price Controls

An incomes policy in which wages and prices are constrained by law not to rise by more than a specified percentage.

Wage Stickiness

Resistance of wages to change.

Benefit Wage Ratio Method

The proportion of total taxable wages for laid off
employees during the measurement period divided by the total payroll during
the period. This calculation is used by states to determine the unemployment
contribution rate to charge employers.

Minimum Wage

An hourly wage rate set by the federal government below
which actual hourly wages cannot fall. This rate can be increased by state governments.

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