Which of the following two statements is true of the graph shown below? Statement 1: The graph leads to a supply of labor curve that is positively sloped throughout.
Statement 2: The opportunity cost of leisure is lower at point A than at pointD.
A)Statement 1
B)Statement 2
C)Both statements are true
D)None of the statements is true

Question

Which of the following two statements is true of the graph shown below? Statement 1: The graph leads to a supply of labor curve that is positively sloped throughout.
Statement 2: The opportunity cost of leisure is lower at point A than at pointD. 
A)Statement 1 
B)Statement 2 
C)Both statements are true 
D)None of the statements is true

Quizplus · Accepted Answer

Statement 1 is false because the graph shows an initially negatively sloped supply of labor curve, which becomes positive after point B.
Statement 2 is true because at point A, the wage rate is lower, which means the opportunity cost of leisure is lower as well. At point D, the wage rate is higher, which means the opportunity cost of leisure is also higher.

Which of the Following Two Statements Is True of the Graph