Use the following to answer questions :
Figure: Davina's Labour Supply Choice
-(Figure: Davina's Labour Supply Choice)The figure Davina's Labour Supply Choice shows Davina's time allocation budget line when her hourly wage is $10 or $15 and she has 80 hours to allocate between labour and leisure;it also shows two of her indifference curves for income and leisure.Davina's labour supply curve is _____ as her hourly wage rises from $10 to $15.
A) upward-sloping
B) downward-sloping
C) vertical
D) horizontal

Question

Use the following to answer questions :
Figure: Davina's Labour Supply Choice 
-(Figure: Davina's Labour Supply Choice)The figure Davina's Labour Supply Choice shows Davina's time allocation budget line when her hourly wage is $10 or $15 and she has 80 hours to allocate between labour and leisure;it also shows two of her indifference curves for income and leisure.Davina's labour supply curve is _____ as her hourly wage rises from $10 to $15.
A) upward-sloping 
B) downward-sloping 
C) vertical 
D) horizontal

Quizplus · Accepted Answer

The labour supply curve shows how many hours of work an individual is willing to supply at different wage rates. As the hourly wage increases from $10 to $15, Davina's budget line shifts outward, making her better off. At the same time, the opportunity cost of leisure (in terms of foregone wages) increases, making leisure relatively less attractive. Therefore, she will choose to work more hours as her hourly wage rises, resulting in a downward-sloping labour supply curve.

Use the Following to Answer Questions