Asked by Vaishnavi Mereddy on May 04, 2024
Verified
If a group has a negative elasticity of labor supply (above some income level), then continued increases in wages will result in decreases in the quantity of labor supplied.
Elasticity of Labor Supply
A measure of the response of labor supplied to a change in the price of labor.
Wages
Payments made to employees by employers, typically based on the number of hours worked or a fixed amount for a certain job.
Quantity of Labor
The total hours worked or the number of employees engaged in production within a certain period.
- Evaluate the role of elasticity in the labor market, specifically how wage adjustments affect labor supply and demand.
Verified Answer
ZK
Zybrea KnightMay 07, 2024
Final Answer :
True
Explanation :
When the elasticity of labor supply is negative, it means that as wages increase, individuals choose to work less because they can maintain or improve their standard of living by working fewer hours. This leads to a decrease in the quantity of labor supplied as wages continue to rise.
Learning Objectives
- Evaluate the role of elasticity in the labor market, specifically how wage adjustments affect labor supply and demand.