A Backward-Bending Supply Curve of Labor Shows That at Relatively

question 274

Multiple Choice

A backward-bending supply curve of labor shows that at relatively low wages the _____ effect dominates the _____ effect,and the supply curve has a _____ slope.

• A)income;substitution;positive
• B)income;substitution;negative
• C)substitution;income;positive
• D)substitution;income;negative

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Definitions:

Fixed Costs

Expenses that do not change in proportion to the activity of a business, such as rent, salaries, and insurance.

Explicit Costs

Input costs that require an outlay of money by the firm

Long-Run Equilibrium

A state where all factors of production and costs are variable, allowing firms to make adjustments leading to the ideal output level.

Profit-Maximizing

A strategic approach in which a firm determines the best output level and pricing to achieve the highest possible profit.