Respuesta :
A backward-bending labor supply curve occurs when the income effect of a wage increase is greater than the substitution effect. So the correct option is b.
The labor supply curve shows the number of laborers that are happy and willing to work at a specific compensation, while the labor demand is the number of laborers that organizations are eager and willing to employ at a specific wage rate.
The backward-bending supply curve happens when the income effect is higher than the substitution effect since more pay in the hand of workers urges them to spend it on relaxation i.e. leisure as opposed to work so a rise in pay prompts workers to work less and recreation more so income effect, for this situation, will be higher than the substitution effects. When the income effect is greater than the substitution effect, labor supplied decreases with an increase in wages.
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