Question on: WAEC Economics - 2018
the backward bending supply curve of labour indicates?
A
an abnormal supply situation
B
the law of supply
C
that labour supply and wage are directly related
D
that the elasticity of supply is uniform
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Correct Option: C
The reason is that there are two effects related to determining supply. The substitution effect states that a higher wage makes work more attractive than leisure. ... The income effect states that a higher wage means workers can achieve a target income by working fewer hours.
Backward bending supply curve is the normal case for most workers. Most economists agree that a worker's supply curve for labor slopes upward at lower wages and bends backward at higher wages.
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