The figure given below shows a backward-bending labor supply curve for an individual. In the figure below, which of the following is true if the wage rate decreases from $14 to $6 per hour?
Figure 12.2

Question

The figure given below shows a backward-bending labor supply curve for an individual. In the figure below, which of the following is true if the wage rate decreases from $14 to $6 per hour? ​
Figure 12.2
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Quizplus · Accepted Answer

In the backward-bending labor supply curve, beyond a certain wage rate, the substitution effect of the wage increase dominates the income effect, causing the labor supply to decrease. Conversely, as the wage rate decreases, the substitution effect dominates the income effect, causing the labor supply to increase. Therefore, if the wage rate decreases from $14 to $6 per hour, the substitution effect dominates the income effect, causing the labor supply to increase, and the best choice is B.

The Figure Given Below Shows a Backward-Bending Labor Supply Curve