Asked by Kayla Calvin on Jul 05, 2024
Verified
According to the theory of the backward-bending labor supply curve,as the hourly wage keeps rising we
A) eventually reach a maximum number of hours worked.
B) eventually reach a minimum number of hours worked.
C) keep increasing indefinitely the number of hours worked.
D) will work a set number of hours whether or not the wage rate is increaseD.
Backward-Bending Labor Supply Curve
As the wage rate rises, more and more people are willing to work longer and longer hours up to a point. They will then substitute more leisure time for higher earnings.
Hourly Wage
Compensation paid based on the number of hours worked, typically expressed as a rate per hour.
- Acquire knowledge on the income effect and the substitution effect as they apply to labor economics.
Verified Answer
LE
Lesley EstradaJul 12, 2024
Final Answer :
A
Explanation :
The backward-bending labor supply curve suggests that as wages increase beyond a certain point, individuals will start valuing their leisure time more than the additional income, leading to a decrease in the number of hours worked. This results in reaching a maximum number of hours worked before the curve bends backward.
Learning Objectives
- Acquire knowledge on the income effect and the substitution effect as they apply to labor economics.