The Labor Supply Curve May Have a Backward-Bending Portion If

question 169

Multiple Choice

The labor supply curve may have a backward-bending portion if, at higher wages, the income effect is

• A)smaller than the substitution effect.
• B)larger than the substitution effect.
• C)negative.
• D)Any of the above could result in a backward-bending supply curve.

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Definitions:

Ego

In psychoanalytic theory, the part of the personality responsible for dealing with reality, balancing the demands of the id and superego.

Impulsive

Acting without forethought or consideration of the consequences, typically driven by immediate desires or emotions.

Illogical

Lacking sense or clear, sound reasoning.

Emotional

Pertaining to feelings or affective states, often influencing behavior, thought processes, and physical states.