The "backward bending" portion of the labor supply curve implies that
A)Higher wages lead to an increase in hours of work supplied
B)The law of diminishing returns has settled in
C)Higher wages lead to fewer hours of work supplied
D)A minimum wage law is in effect

Question

Quizplus · Accepted Answer

The "backward bending" portion of the labor supply curve indicates that after a certain point, higher wages lead to a decrease in the quantity of labor supplied. This occurs when individuals reach a point where they value leisure time more than additional income, and thus may choose to work fewer hours despite higher wages.

The "Backward Bending" Portion of the Labor Supply Curve Implies