If the supply curve of labor is positively sloped,the income effect is dominating.

Question

Quizplus · Accepted Answer

If the supply curve of labor is positively sloped, it means that as the wage rate increases, the quantity of labor supplied also increases. This is the substitution effect, which implies that individuals are willing to work more at higher wages as the opportunity cost of leisure increases. The income effect, on the other hand, suggests that individuals may work less when their income increases because they have the option to consume more leisure. Therefore, if the supply curve of labor is positively sloped, it means that the substitution effect is dominating over the income effect.

If the Supply Curve of Labor Is Positively Sloped,the Income