In Order for a Labor Supply Curve to Be Backward

question 214

Multiple Choice

In order for a labor supply curve to be backward bending at high wages,

• A)leisure must be an inferior good.
• B)the substitution effect of a wage increase must be greater than the income effect.
• C)workers must have an irrational response to wage increases.
• D)the income effect of a wage increase must be greater than the substitution effect.

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Definitions:

Alarm Phase

The initial reaction of the body to stress, activating the sympathetic nervous system and the fight or flight response.

Blood Pressure

The force exerted by circulating blood on the walls of blood vessels, often measured for health assessment.

General Adaptation Syndrome

A three-stage response (alarm, resistance, exhaustion) that the body goes through when under stress, as proposed by Hans Selye.

Resistance Phase

The second stage of the general adaptation syndrome, characterized by the body's adaptation to a continuous stressor and an attempt to restore homeostasis.