What does the backward-bending portion of an individual labour supply curve indicate
A)dominant income effects at higher levels of income
B)dominant income effects at lower levels of income
C)a desire to reduce work effort (hours) as wage rate falls
D)a desire to increase work effort (hours) as wage rate rises

Question

Quizplus · Accepted Answer

The backward-bending portion of an individual labor supply curve indicates that at higher levels of income, the income effect dominates the substitution effect, leading individuals to work fewer hours as wages increase.

What Does the Backward-Bending Portion of an Individual Labour Supply