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12. The backward-bending labor supply curve Aa Aa Deborah has 80 hours per week

ID: 1207841 • Letter: 1

Question

12. The backward-bending labor supply curve Aa Aa Deborah has 80 hours per week to devote to working or to leisure. She is paid an hourly wage and can work at her ob as many hours a week as she likes. The following graph iltrates Deborah's income-leisure tradeoff. The three lines labeled BL1, BL2, and BL3 illustrate her time allocation budget at three different wages; points A, B, and C show her optimal time allocation choices along each of these constraints. INCOME (Dollars per weekl 1,920 BL 1,280 BL2 640 30 35 40 QUANTITY OF LEISURE [Hours per weekl According to point B, if Deborah earns a wage of per week and spend the remaining , she will choose to work hours hours per week in leisure.

Explanation / Answer

1280

30 hours

50 hours

Upward sloping,

Less,

Income

Substitute