Question 12
Labour MarketThe backward bending supply curve of labour indicates
- A.an abnormal supply situation.
- B.the law of supply.
- C.that labour supply and wage rate are directly related.
- D.that the elasticity of supply is uniform.
Show the answer and explanation
Answer: A (an abnormal supply situation.)
Explanation
Beyond a certain wage, workers offer fewer hours as wages rise, which goes against the normal law of supply.