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wrote...
Posts: 73
2 weeks ago

Question 1.

In order for a labor supply curve to be backward bending at high wages,

• leisure must be an inferior good.

• the substitution effect of a wage increase must be greater than the income effect.

• workers must have an irrational response to wage increases.

• the income effect of a wage increase must be greater than the substitution effect.

Question 2.

If the substitution effect of a wage increase dominates the income effect, the labor supply curve has a positive slope.

• true

• false
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Microeconomics
Edition: 7th
Authors:
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Answer verified by a subject expert
wrote...
Posts: 63
2 weeks ago
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Answer 1

the income effect of a wage increase must be greater than the substitution effect.

Answer 2

true
1
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2 weeks ago
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