Use the following to answer questions :
Figure: The Time Allocation Budget Line
-If the labour supply curve bends backward,then the backward-bending portion reveals that _____ is a(n)_____ good and the _____ effect is greater than the _____ effect.
A) labour;normal;income;substitution
B) labour;inferior;substitution;income
C) leisure;normal;income;substitution
D) leisure;inferior;substitution;income

Question

Use the following to answer questions :
Figure: The Time Allocation Budget Line 
-If the labour supply curve bends backward,then the backward-bending portion reveals that _____ is a(n)_____ good and the _____ effect is greater than the _____ effect.
A) labour;normal;income;substitution 
B) labour;inferior;substitution;income 
C) leisure;normal;income;substitution 
D) leisure;inferior;substitution;income

Quizplus · Accepted Answer

The backward-bending portion on the labour supply curve shows that leisure is a normal good and the income effect is greater than the substitution effect. This means that as income increases, individuals are likely to work less because they value leisure time more, even if the wage rate increases.

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