The supply curve is believed to bend backward at high wage rates because
A)income effects outweigh substitution effects.
B)substitution effects outweigh income effects.
C)the income and substitution effects work together to create the backward bend.
D)leisure time is less attractive.

Question

Quizplus · Accepted Answer

At high wage rates, workers may choose to work less because the income effect (desire for more leisure due to higher income) outweighs the substitution effect (desire to work more due to higher wages).

The Supply Curve Is Believed to Bend Backward at High