The Labor Supply Curve Starts to Bend Backward Once the

question 95

Multiple Choice

The labor supply curve starts to bend backward once the

• A)Income effect exceeds the substitution effect.
• B)Substitution effect exceeds the income effect.
• C)Marginal revenue product of labor equals the marginal utility of leisure.
• D)Total utility of leisure outweighs the total utility of labor.

---

Definitions:

Variable Cost

Costs that change in proportion to the level of output or activity in a business operation.

Total Variable Cost

The total of all costs that vary with changes in the production level or sales volume, such as raw materials, direct labor, and variable overhead.

Relevant Range

The range of activity or volume over which the assumed cost behavior is valid, within which fixed and variable costs do not change.

Incremental Manufacturing Cost

The additional cost incurred by producing one more unit of a product, often considered in decision-making and pricing.