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Why does a market labor supply curve have a positive slope even though individual labor supply curves may be backward bending? A
Why does a market labor supply curve have a positive slope even though individual labor supply curves may be backward bending?
A. As wages rise, more and more workers will enter the market.
B. As wages rise, all workers will be willing to work more hours.
C. As wages rise, product demand will fall.
D. As wages rise, fewer and fewer employers are willing to hire workers.
Expert Solution
The correct answer is B.
The market labor supply curve can experience a positive despite a backward flexing of the independent labor supply curve because an increase in wages motivates employees to work additional hours. When the individual labor supply curve bends backward, it implies that significant wages might cause a reduced supply of labor at a given point. This is because some workers can relax at work after acquiring large amounts of wages. However, this doesn't mean that the amount of labor supplied in the market will reduce. Due to the large amounts of wages, workers are motivated to work more hours, which might increase the general output in the labor market.
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