The Figure Given Below Shows a Backward-Bending Labor Supply Curve

question 135

Multiple Choice

The figure given below shows a backward-bending labor supply curve for an individual. In the figure below, which of the following is true if the wage rate decreases from $14 to $6 per hour? ​
Figure 12.2
​

• A)The income effect dominates the substitution effect.
• B)The substitution effect dominates the income effect.
• C)No labor is supplied.
• D)The income effect equals the substitution effect.
• E)The supply curve is horizontal.

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