Asked by Hunain Nadeem on Jul 01, 2024
Verified
The backward-bending labor supply curve includes each of these variables except
A) the income effect.
B) the substitution effect.
C) the savings effect.
Backward-Bending
Describes a labor supply curve reflecting a situation where higher wages lead to a decrease in labor supplied because individuals opt for leisure over work.
Labor Supply Curve
A graphical representation showing the relationship between the different levels of wages and the quantity of labor workers are willing to supply.
Income Effect
A person’s willingness to give up some income in exchange for more leisure time.
- Understand the concepts of the labor supply curve, including the backward-bending labor supply curve.
Verified Answer
JB
Jared Burroughs5 days ago
Final Answer :
C
Explanation :
The backward-bending labor supply curve is shaped by the income and substitution effects. As wages increase, individuals may choose to work more in order to take advantage of the higher income (income effect) or they may choose to work less because their income needs are satisfied and they can afford more leisure time (substitution effect). The savings effect is not a factor in shaping the backward-bending labor supply curve.
Learning Objectives
- Understand the concepts of the labor supply curve, including the backward-bending labor supply curve.