-Refer to the diagram above. What is the significance of the point at the top of the backward bending of the supply curve marked L3?
A) as wages increase over this range, the quantity of hours worked also increases.
B) as wages increase over this range, the quantity of hours worked changes very little.
C) as wages increase of this range, the quantity of hours worked is more inelastic.
D) as wages increase over this range, the quantity of hours worked actually decreases.

Question

-Refer to the diagram above. What is the significance of the point at the top of the backward bending of the supply curve marked L3?
A) as wages increase over this range, the quantity of hours worked also increases. 
B) as wages increase over this range, the quantity of hours worked changes very little. 
C) as wages increase of this range, the quantity of hours worked is more inelastic. 
D) as wages increase over this range, the quantity of hours worked actually decreases.

Quizplus · Accepted Answer

The point at the top of the backward bending supply curve (L3) signifies a level of wages at which further increases in wages lead to a decrease in the quantity of hours worked. This is because individuals may choose to work fewer hours, valuing their leisure time more as their income becomes sufficiently high.

-Refer to the Diagram Above