A Backward-Bending Supply Curve of Labor Shows That at Relatively

question 151

Multiple Choice

A backward-bending supply curve of labor shows that at relatively low wages the:

• A) income effect dominates the substitution effect, and the supply curve has a positive slope.
• B) income effect dominates the substitution effect, and the supply curve has a negative slope.
• C) substitution effect dominates the income effect, and the supply curve has a positive slope.
• D) substitution effect dominates the income effect, and the supply curve has a negative slope.

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed.

Labor Migration

The movement of people from one area to another for the purpose of employment.

Europe

A continent located entirely in the Northern Hemisphere and mostly in the Eastern Hemisphere, comprising various countries with diverse cultures and economies.

Cross-price Elasticity

A measure of how the quantity demanded of one good responds to a change in the price of another good, indicating the relationship between goods as substitutes or complements.