The "Backward Bending" Portion of the Labor Supply Curve Implies

question 11

Multiple Choice

The "backward bending" portion of the labor supply curve implies that

• A)Higher wages lead to an increase in hours of work supplied
• B)The law of diminishing returns has settled in
• C)Higher wages lead to fewer hours of work supplied
• D)A minimum wage law is in effect

---

Definitions:

Midpoint Method

A technique used to calculate elasticity by taking the average of the starting and ending prices and quantities to determine percentage changes.

Income Elasticity of Demand

An indicator of the variability in a product's demand based on shifts in consumer income.

Price Elasticity of Supply

An indicator of the sensitivity of the amount of a product supplied to fluctuations in its price.

Price Elasticity of Supply

A measure of how much the quantity supplied of a good responds to a change in the price of that good, indicating the producers' ability to adjust supply when prices change.