The labor supply curve is backward bending because at higher wages the income effect eventually dominates the substitution effect.

Name: The labor supply curve is backward bending because at higher wages the income effect eventually dominates the substitution effect.
Brand: Quizplus
Rating: 4.9 (51 reviews)

Question

Quizplus · Accepted Answer

The labor supply curve can bend backward when higher wages lead workers to prefer more leisure over additional work, as the income effect (desire for leisure) outweighs the substitution effect (incentive to work more).

The Labor Supply Curve Is Backward Bending Because at Higher