In most real-world labor markets, the _______ effect usually dominates, and thus we assume a(n)_______ supply curve.

Question

Quizplus · Accepted Answer

The substitution effect usually dominates in real-world labor markets, leading to the assumption of an upward-sloping supply curve. This is because as wages increase, workers are incentivized to work more, substituting labor for leisure, hence the supply of labor increases.

In Most Real-World Labor Markets, the _______ Effect Usually Dominates