A backward-bending supply curve of labour shows that at relatively low wages,the _____ effect dominates the _____ effect,and the supply curve has a _____ slope.
A) income;substitution;positive
B) income;substitution;negative
C) substitution;income;positive
D) substitution;income;negative

Question

Quizplus · Accepted Answer

At relatively low wages, the substitution effect dominates the income effect, leading to a positive slope in the supply curve of labor.

A Backward-Bending Supply Curve of Labour Shows That at Relatively