The Upward Sloping Portion of the Supply Curve for Labor

question 43

Multiple Choice

The upward sloping portion of the supply curve for labor 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

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Definitions:

Risk-averse

A characteristic of preferring to avoid loss over making a gain, typically by selecting the option with the smallest possible risk.

Expected Utility

A theory in economics that quantifies how choices are made when the outcomes are uncertain.

Utility

A measure of satisfaction or pleasure that individuals get from the consumption of goods and services.

Risk Premium

The extra return expected by investors for holding a risky asset over a risk-free one, serving as compensation for the additional risk.