The Typical Labor Supply Curve Is Upward Sloping but It

question 253

Multiple Choice

The typical labor supply curve is upward sloping but it is possible for the curve to be backward bending -negatively sloped-at very high wage levels.Which of the following would cause a backward-bending supply curve?

• A)This would occur when the income effect from an increase in the wage becomes larger than the substitution effect.
• B)This would occur when the substitution effect from an increase in the wage becomes larger than the income effect.
• C)This would occur if leisure is an inferior good.
• D)This would occur when a large number of workers choose leisure rather than employment at low wages; only a very large increase in the wage will lead these workers to prefer employment to leisure.

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Definitions:

Standard Variable Overhead Rate

A predetermined rate used to allocate variable overhead costs to the cost of producing goods or services.

Machine Setup

The process of preparing and adjusting machines and equipment for a specific production run or job order.

Planning Budget

A financial plan that estimates revenue and expenses over a specific period in the future, guiding managerial decisions and actions.

Revenue

The total amount of money received by a company for goods sold or services provided during a certain period of time.