In Order for There to Be a Backward-Bending Supply of Labor

question 36

Multiple Choice

In order for there to be a backward-bending supply of labor curve, it must be the case that

• A) at low wage rates, the income effect of a wage increase exceeds the substitution effect, but at high wage rates the substitution effect of a wage increase exceeds the income effect.
• B) at low wage rates, the substitution effect of a wage increase exceeds the income effect, but at high wage rates the income effect of a wage increase exceeds the substitution effect.
• C) the income effect of a wage increase exceeds the substitution effect at all wage rates.
• D) the substitution effect of a wage increase exceeds the income effect at all wage rates.

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Definitions:

Income Statement

A financial document that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and profits.

Dividend Yield Ratio

A financial ratio that shows how much a company pays out in dividends each year relative to its share price.

Par Value

A nominal value assigned to a security or stock as stated in the corporate charter.

Dividend Payout Ratio

This is a financial ratio that measures the percentage of earnings paid to shareholders in the form of dividends.