Normally, if the income effect dominates the substitution effect in the labour supply decision, what happens when the wage increases?
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1 mark, −0.33MicroeconomicsFactor markets and income distributionLabour supply and the income and substitution effectsModerateabout 1 min
UoH 2015 Question 6: Factor markets and income distribution
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Factor markets and income distribution has come up 55 times in 6 exams since 2006.
What this question tests
This question is on Labour supply and the income and substitution effects, part of Factor markets and income distribution in Microeconomics.
How hours worked respond to the wage, including the backward-bending supply curve.
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