Question

"A higher wage may at some point induce an individual to work

_____. When this happens, the labor supply curve is _____.
A more; backward bending
B less; backward bending
C more; horizontal
D harder; vertical"

Answer 1

Workers may choose to work less as a result of a higher wage, leading to a backward-bending labor supply curve.

Step-by-step explanation:

The backward-bending supply curve for labor occurs when workers respond to higher wages by choosing to work fewer hours. This phenomenon is more commonly observed in the long run rather than the short run. For example, well-paid professionals like dentists or accountants may choose to work less when their wages increase.

The decrease in hours worked as wages increase is represented by the backward-bending portion of the labor supply curve. In this range, the quantity of hours worked actually decreases in response to higher wages. This behavior can be explained by the tradeoff between work and leisure activities and the movement in the labor-leisure budget constraint.