The supply of labor curve has a ________ slope because as the real wage rate rises,________.

Question

Quizplus · Accepted Answer

The supply of labor curve has a positive slope because as the real wage rate rises, the opportunity cost of leisure rises. This means that workers are willing to supply more labor (i.e., work more hours) as the wage rate increases. Choice A and D are incorrect because they both have negative slopes, which would imply that workers supply less labor as the wage rate increases. Choice C is incorrect because it implies that workers value leisure less as the wage rate increases, which is not generally the case. Choice E is also incorrect because it suggests that firms have control over the supply of labor, which is not true in a competitive labor market.

The Supply of Labor Curve Has a ________ Slope Because