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

question 22

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 at a wage rate of $7? ​
Figure 12.3
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• A)The income effect dominates the substitution effect.
• B)The substitution effect dominates the income effect.
• C)The income effect exactly offsets the substitution effect.
• D)No labor is supplied.
• E)The individual will supply 30 hours of labor.

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Definitions:

Materials Price Variance

The difference between the actual unit price paid for an item and the standard price, multiplied by the quantity purchased.

Standard Quantity

The expected or established quantity of materials or labor expected to be used during a manufacturing process or production cycle.

Standard Price

Standard price is the pre-determined cost that a company expects to pay for goods, materials, or services, used in budgeting and cost control.

Actual Output

Actual output is the real quantity of goods or services produced by a company or economy, as opposed to planned or theoretical outputs.