Why does the labor supply curve eventually bend backwards?
What will be an ideal response?
The wage rate represents the opportunity cost of leisure. Starting from a relatively low wage, as the wage increases, leisure becomes more expensive and so workers substitute labor for leisure. As a result, a higher wage means less leisure and more labor and the supply curve is positively sloped. At a sufficiently high wage, however, the worker's income is high enough that, even though leisure has gone up in price, the worker can afford to "buy" more leisure by working less. So, at a high wage, the labor supply curve becomes negatively sloped.
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If Barbecue Bob has a right to own and use his backyard barbecue, then Barbecue Bob also enjoys
A) a right to pollute. B) a right to steal. C) a right to free charcoal. D) a right to clean air.
The downward sloping marginal revenue product of labor is
A) the firm's supply of labor. B) the firm's short-run demand for labor. C) the firm's marginal cost of labor. D) another term for the marginal revenue product of labor.
In the long run, monopolistically competitive firms typically produce with allocative efficiency
a. True b. False Indicate whether the statement is true or false
Refer to the information provided in Figure 24.5 below to answer the question(s) that follow.
Figure 24.5Refer to Figure 24.5. At aggregate output of $________ billion, unplanned inventories equal $200 billion.
A. 2,400 B. 3,000 C. 3,200 D. 3,600