Question

Your college roommate receives a pay raise at her part-time job from $9 to $11 per hour. She used to work 25 hours per week, but now she decides to work 20 hours per week in order to spend more time studying economics. For this price range, her labor supply curve is a. vertical. b. horizontal. c. upward sloping. d. backward sloping.

Answer 1

The college roommate's decision to work fewer hours despite a pay raise illustrates a backward-bending labor supply curve. This indicates a higher valuation of leisure or non-work activities as wages increase, resulting in choice (d) backward sloping.

Step-by-step explanation:

The student's question concerns how the labor supply curve reacts to a change in wages, specifically when a worker decides to work fewer hours despite an increase in wage rate. In this scenario, the college roommate receives a wage increase from $9 to $11 per hour yet chooses to reduce the weekly working hours from 25 to 20 to have more time for studying. This behavior is an example of what's known as a backward-bending labor supply curve, where high-wage earners may work fewer hours, valuing leisure or other activities more than the additional income from working extra hours.

In relation to the options provided, this would correspond to answer (d) backward sloping. The backward-bending portion of the labor supply curve demonstrates that as wages increase above a certain threshold, the quantity of hours worked might actually decrease due to the increased valuation of leisure or non-work activities.

In summary, the labor supply curve in this case shows a backward bend because the roommate chose to work less despite earning a higher wage, indicating a preference for leisure (studying) over additional income from work. This concept is important to understand as it illustrates the non-linear and individual-specific nature of labor supply in response to wage changes.

Answer 2

d. backward sloping.

Step-by-step explanation:

The roommate receives a pay raise at her part-time job from $9 to $11 per hour and now decides to work 20 hours per week instead to 25 hours per week.

We can see that her rate is decreasing, so her labor supply curve is backward sloping or also called backward bending.

It is mostly found that worker's labor supply curve, slopes upward when they get lower wages and the curve bends backward when they get higher wages because a worker tends to work less when his wage rate rises.