Within the labor-leisure framework, when an individual's income effect is stronger than the substitution effect from a wage increase, it will result in:
A) an inverted U-shaped labor supply curve.
B) a labor supply curve that is upward-sloping but from the origin.
C) a backward-bending labor supply curve.
D) an upward-sloping labor supply curve.

Question

Quizplus · Accepted Answer

When the income effect is stronger than the substitution effect, individuals will choose to work less as wages increase, leading to a backward-bending labor supply curve.

Within the Labor-Leisure Framework, When an Individual's Income Effect Is