If leisure is an inferior good, then the slope of the labour supply curve is __________.
The labour supply curve has a positive slope when leisure is an inferior good. A wage increase raises the opportunity cost of leisure, and its income effect also reduces…
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If leisure is an inferior good, then the slope of the labour supply curve is __________.
Answer and explanation
Correct answer A
The labour supply curve has a positive slope when leisure is an inferior good. A wage increase raises the opportunity cost of leisure, and its income effect also reduces demand for inferior leisure, so both effects increase labour supplied.
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Kerala SET (LBS Centre)