Biology Forums - Study Force

The typical labor supply curve is upward sloping but it is possible for the curve to be backward bending — negatively sloped — at very high wage levels. Which of the following would cause a backward-bending supply curve?

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This would occur when a large number of workers choose leisure rather than employment at low wages; only a very large increase in the wage will lead these workers to prefer employment to leisure.

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This would occur when the income effect from an increase in the wage becomes larger than the substitution effect.

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This would occur if leisure is an inferior good.

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This would occur when the substitution effect from an increase in the wage becomes larger than the income effect.

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