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

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

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

Textbook

Microeconomics

Edition: 7^th

Authors: Hubbard, O'Brien

Read 85 times

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jesika1122

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More solutions for this book are available here

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parneetgill Author

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