Suppose an individual worker is on the upsloping portion of her labor supply curve.Then for a wage increase the:

Question

Quizplus · Accepted Answer

When an individual is on the upsloping portion of their labor supply curve, it means they are willing to work more hours as their wage increases. In this case, the substitution effect dominates the income effect. This means that as the wage increases, the opportunity cost of leisure time increases, which incentivizes the worker to work more hours. The income effect would suggest that as the wage increases, the worker may choose to work fewer hours because they can afford to enjoy more leisure time. However, in this case, the substitution effect is stronger and the worker will choose to work more hours. Therefore, option D is correct.

Suppose an Individual Worker Is on the Upsloping Portion of Her