The backward-bending labor supply curve occurs because workers value leisure
A) and income differently as wages change.
B) consistently more than they do income at all wages.
C) consistently less than they do income at all wages.
D) and income by the same amount at all wages.
E) and income by fluctuating,unpredictable amounts at any wage.

Question

Quizplus · Accepted Answer

The backward-bending labor supply curve shows that at higher wages, workers start valuing leisure more than additional income. This is because with higher wages, they can afford to work fewer hours and still earn enough income to meet their needs and wants. As a result, the substitution effect of higher wages (which causes workers to work more) is offset by the income effect (which causes workers to work less). Therefore, the labor supply curve bends backward.

The Backward-Bending Labor Supply Curve Occurs Because Workers Value Leisure