At Low Wages, the Labor Supply Curve for Most People

question 189

Multiple Choice

At low wages, the labor supply curve for most people slopes upward because

• A)the supply of labor is perfectly inelastic at low wages.
• B)as wages increase the opportunity cost of leisure increases.
• C)as wages increase income also increases unless hours worked decrease.
• D)the demand for labor is perfectly elastic at low wages.

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Definitions:

Income

Income earned, particularly in a consistent manner, from labor or investment returns.

U.S. Exports

Goods and services produced in the United States and sold to other countries.

Aggregate Expenditure Line

A relationship tracing, for a given price level, spending at each level of income, or real GDP; the total of C + I + G + (X - M) at each level of income, or real GDP.

Marginal Propensity

The ratio of the change in consumption to the change in income, indicating how much consumption will change with a change in income.