Sam is currently earning $150,000 per year working an 80 hour week. He has just refused a job offer that would increase his salary to $175,000 and require him to work 90 hours per week. What can we say about Sam's labor supply curve?

Question

Quizplus · Accepted Answer

The fact that Sam refused a job offer that would increase his salary but require him to work more hours indicates that his labor supply curve is backward bending. In other words, as his wage rate increases, he may initially choose to work more hours, but at some point, the additional income is not worth the loss of leisure time. This is consistent with the idea that individuals have a limited amount of time and must make choices about how to allocate it between work and leisure.

Sam Is Currently Earning $150,000 Per Year Working an 80