Which of the Following Helps to Explain Why the Supply

question 67

Multiple Choice

Which of the following helps to explain why the supply curve of labor is upward sloping?

• A)The supply curve of labor is a derived supply curve; since the output supply curve is upward-sloping, so is the labor supply curve.
• B)As the wage rate rises, the income effect causes the quantity of labor supplied to increase.
• C)The substitution effect of a price change makes a good less expensive relative to other goods.
• D)As the wage rate rises, the opportunity cost of leisure rises.

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Definitions:

Opportunity Cost of Shirking

The benefits a worker forgoes by choosing to shirk (reduce their level of effort or productivity) at work, which could include potential wage increases, promotions, or job security.

Shirking

The action of avoiding or escaping from work or duties.

Monitoring Costs

Expenses involved in overseeing and controlling the performance of a business or investment.

CEO's Pay

The compensation package, including salary, bonuses, and benefits, provided to the Chief Executive Officer of a company.