Worker surplus can be measured as an area on the market labor supply curve if worker tastes are quasilinear in leisure.

Question

Quizplus · Accepted Answer

Worker surplus is the difference between the wage a worker receives and their reservation wage, which is the minimum amount they are willing to work for. If worker tastes are quasilinear in leisure, this means that they only care about their income and are indifferent to how much leisure time they have. In this case, worker surplus can be measured as the area above the wage rate and below the labor supply curve, which represents the amount of extra income the worker receives compared to their reservation wage.

Worker Surplus Can Be Measured as an Area on the Market