Between two wages, an individual's supply curve of labor will be upward sloping if the individual's substitution effect outweighs the income effect between those two wages.

Question

Quizplus · Accepted Answer

The substitution effect, which makes leisure more expensive relative to work as wages increase, encourages more work hours, leading to an upward-sloping supply curve of labor when it outweighs the income effect (which might lead one to work less due to higher income).

Between Two Wages, an Individual's Supply Curve of Labor Will