An individual's labour supply curve slopes upward because
A)an increase in the future real wage leads to an increase in the amount of labour supplied.
B)an increase in the current real wage leads to a decrease in the amount of labour supplied.
C)an increase in the future real wage leads to a decrease in the amount of labour supplied.
D)an increase in the current real wage leads to an increase in the amount of labour supplied.

Question

Quizplus · Accepted Answer

The law of supply states that an increase in the price of a good or service will generally lead to an increase in the quantity supplied. When applied to labour, the price of labour is the wage rate. An increase in the current real wage makes leisure (non-work) more expensive in terms of forgone income, so individuals are incentivized to work more to earn more income, leading to an increase in the amount of labour supplied. Therefore, an individual's labour supply curve slopes upward.

An Individual's Labour Supply Curve Slopes Upward Because