The typical labor supply curve is upward sloping but it is possible for the curve to be backward bending negatively slopedat very high wage levels. Which of the following would cause a backward-bending supply curve?
A) This would occur if leisure is an inferior good.
B) This would occur when the substitution effect from an increase in the wage becomes larger than the income effect.
C) This would occur when a large number of workers choose leisure rather than employment at low wages; only a very large increase in the wage will lead these workers to prefer employment to leisure.
D) This would occur when the income effect from an increase in the wage becomes larger than the substitution effect.
Question 2
Labor productivity is
A) the quantity of capital one worker can produce in one day.
B) the quantity of output produced in one hour by several workers.
C) the quantity of output produced in one hour by one machine.
D) the quantity of output produced by one worker or by one hour of work.
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