Final answer:
A higher hourly wage results in an increased value of living near the CBD and a steeper bid-rent curve. The labor supply curve can be backward-bending as higher wages may eventually lead to a preference for leisure, reducing the quantity of labor supplied.
Step-by-step explanation:
A higher hourly wage does indeed increase the value of being close to the central business district (CBD) and leads to a steeper slope of the bid-rent curve. This is because individuals with higher incomes tend to value their time more, and thus have a stronger preference for living closer to the CBD where commuting times are shorter. As for the labor supply curve, it is true that it can be backward-bending at higher wage rates.
Initially, as the wage rate increases, individuals supply more labor because the higher wages incentivize more work. However, at some point, the increase in the wage rate can lead to a preference for leisure over labor, resulting in a decrease in the quantity of labor supplied even as wages rise further. This is reflected in the backward-bending portion of the labor supply curve.