Which of the following statements describes a backward-bending labor supply curve?
A)Every hour that I work represents a loss of an hour of leisure.
B)I asked for extra hours this month to pay for a new bicycle.
C)When I received my last raise, I cut back on my overtime hours so that I could work fewer hours but earn the same amount of money per week.
D)I worked more hours when I was younger.

Question

Quizplus · Accepted Answer

A backward-bending labor supply curve occurs when an increase in wages initially leads to an increase in labor supply, but eventually leads to a decrease in labor supply as the opportunity cost of leisure becomes higher. In option C, the worker cuts back on their overtime hours when they receive a raise, indicating that they value leisure time more highly than the additional income from working overtime. A backward-bending labor supply curve occurs when an individual reduces the number of hours worked as their wage rate increases, rather than the expected increase in labor supply. This behavior suggests that individuals view leisure as a normal good and as their income rises, they desire more leisure time. Choice C refers to this behavior as the individual chooses to work less overtime after receiving a raise, which allows for the same amount of income with fewer hours worked.

Which of the Following Statements Describes a Backward-Bending Labor Supply