For a person on the backward-bending part of his labor supply curve, the "substitution effect" is weaker than the "income effect."

Name: For a person on the backward-bending part of his labor supply curve, the "substitution effect" is weaker than the "income effect."
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Question

Quizplus · Accepted Answer

On the backward-bending part of the labor supply curve, as wages increase, the income effect dominates the substitution effect, leading to a decrease in labor supply. Therefore, the statement is true.

For a Person on the Backward-Bending Part of His Labor