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.

Learn how certainty and uncertainty in the market impact investment spending.

Know how to calculate the future and present values of money based on current interest rates.

Define investment in economic terms and distinguish it from general financial transactions.

Identify factors that stimulate or slow down investment in varying interest rate environments.

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Definitions:

Service Level

A measure of the quality of service provided, often evaluated in terms of speed, reliability, and customer satisfaction.

Lead Time

The amount of time it takes from the initiation of a process until its completion, including the time taken for preparation, processing, and delivery.

Standard Deviation

A statistical measure of the dispersion or variation in a set of values, indicating how much the values diverge from the average of the set.

Safety Stock

Inventory kept on hand to protect against fluctuations in demand or supply, ensuring that there are no stockouts.