Figure 1.1
-Refer to Figure 1.1.If income at zero hours worked increases in Figure 1.1,then the relationship
A) becomes flatter.
B) becomes steeper.
C) shifts upward and to the left.
D) shifts down and to the right.

Question

Figure 1.1
-Refer to Figure 1.1.If income at zero hours worked increases in Figure 1.1,then the relationship
A) becomes flatter. 
B) becomes steeper. 
C) shifts upward and to the left. 
D) shifts down and to the right.

Quizplus · Accepted Answer

The graph in Figure 1.1 represents a negatively sloping labor supply curve, meaning that as hours worked increase, income increases at a decreasing rate. If income at zero hours worked increases, it implies that the individual has another source of income or is receiving a larger wage subsidy. This would shift the entire labor supply curve upwards and to the left, as the individual is able to earn a higher income without having to work as many hours.

Figure 1.1 -Refer to Figure 1.1.If Income at Zero Hours Worked Increases