A backward-bending labor supply curve implies that a) workers are irrational. b)

Question

A backward-bending labor supply curve implies that a) workers are irrational. b) leisure is an inferior good. c) the substitution effect dominates the income effect atlower wage rates but not at higher wage rates. d) the substitution effect dominates the income effect atheigher wage rates but not at lower wage rates. A backward-bending labor supply curve implies that a) workers are irrational. b) leisure is an inferior good. c) the substitution effect dominates the income effect atlower wage rates but not at higher wage rates. d) the substitution effect dominates the income effect atheigher wage rates but not at lower wage rates.

Explanation / Answer

c) the substitution effect dominates the income effect atlower wage rates but not at higher wage rates.
See: http://www.bized.co.uk/virtual/vla/theories/labour_supply_bb.htm

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