If a person's labor supply curve is positively sloped, the income effect outweighs the substitution effect.

Question

Quizplus · Accepted Answer

If a person's labor supply curve is positively sloped, then the substitution effect outweighs the income effect. This means that as the wage rate increases, the person is willing to substitute leisure time for work time. The income effect, which would suggest that the person would work less as their income increases, is not strong enough to offset this substitution effect. Therefore, the correct answer is B.

If a Person's Labor Supply Curve Is Positively Sloped, the Income