Asked by Sophia Colosimo on May 28, 2024
Verified
Refer to Figure 14.1.2 above. Which of these two effects prevails in the backward bending portion of the supply curve?
A) The income effect
B) The substitution effect
C) The leisure effect
D) The wage effect
Backward Bending
A curve, often related to the labor supply, indicating that beyond a certain wage level, as wages increase, individuals may choose to work fewer hours, prioritizing leisure over additional income.
Income Effect
The change in an individual's or economy's income and how that change will impact the quantity demanded of a good or service.
Substitution Effect
The change in consumption patterns due to a change in relative prices, leading consumers to substitute one product for another more affordable one.
- Comprehend the essence of the backward bending labor supply curve and identify the elements that contribute to its formation.
Verified Answer
Learning Objectives
- Comprehend the essence of the backward bending labor supply curve and identify the elements that contribute to its formation.
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