An Increase in the Wage Hours of Leisure 0
Consumption (a) For a person with these preferences . . . Hours of Labor Supplied 0
Wage . . . the labor supply curve slopes upward. Hours of Leisure 0
Consumption (b) For a person with these preferences . . . Hours of Labor Supplied 0
Wage . . . the labor supply curve slopes backward. I 1
I 2
BC 2
BC 1
I 1
I 2
BC 2
BC 1
1. When the wage rises . . .
2. . . . hours of leisure increase . . .
3. . . . and hours of labor decrease.
2. . . . hours of leisure decrease . . .
3. . . . and hours of labor increase.
1. When the wage rises . . .
Labor
supply
Labor
supply
Carrie’s decision between leisure and consumption determines her supply of
labor because the more leisure she enjoys, the less time she has left to work. In
each panel of Figure 14, the right graph shows the labor-supply curve implied by
Carrie’s decision. In panel (a), a higher wage induces Carrie to enjoy less leisure
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