The labor supply curve is fundamentally a representation of the trade-off people face between which of the following?
A) leisure and derived demand
B) work and wages
C) work and leisure
D) wages and productivity
E) technology and wages

Question

Quizplus · Accepted Answer

The labor supply curve represents the trade-off people face between work and leisure. This is because individuals must decide how much time they wish to spend working (thereby receiving a wage) versus how much time they wish to spend engaged in leisure activities. As the wage rate increases, the opportunity cost of leisure time increases and more individuals are motivated to work. Similarly, as the wage rate decreases, the opportunity cost of leisure time decreases and individuals are less motivated to work. Thus, the labor supply curve shows how changes in the wage rate affect the quantity of labor supplied, as individuals respond to changes in the trade-off between work and leisure.

The Labor Supply Curve Is Fundamentally a Representation of the Trade-Off