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The Labour Supply Curve May Eventually Become "Backward Bending" at High

Question 24

Multiple Choice

The labour supply curve may eventually become "backward bending" at high wages because


A) the income effect of the higher wage is dominated by the substitution effect.
B) the income effect of the higher wage dominates the substitution effect of the higher wage.
C) firms will demand added productivity from the workers as the wage reaches very high levels.
D) firms will demand longer hours in trade for the higher wages.
E) people get tired of working so many hours and refuse to increase their labour supply.

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