Figure 18-3
The figure shows a particular profit-maximizing, competitive firm's value-of-marginal-product (VMP) curve.
-Fiona's hourly wage increases from $8 to $10. Which of the following describes a consequence of the increase in Fiona's wage?

Question

Figure 18-3
The figure shows a particular profit-maximizing, competitive firm's value-of-marginal-product (VMP) curve.  ​
-Fiona's hourly wage increases from $8 to $10. Which of the following describes a consequence of the increase in Fiona's wage?

Quizplus · Accepted Answer

When Fiona's hourly wage increases, the opportunity cost of her leisure time also increases, making leisure time more costly in terms of forgone earnings. This could lead her to choose to work fewer hours to enjoy more leisure time, especially if she values her free time more than the additional income. This decision is consistent with the concept of a backward-bending supply curve of labor, where beyond a certain wage level, individuals may choose to work fewer hours, prioritizing leisure over additional income.

Figure 18-3 The Figure Shows a Particular Profit-Maximizing, Competitive Firm's Value-Of-Marginal-Product (VMP)