4003EconomicsMedium
Assuming that leisure is a normal good. if an individual’s labour supply curve is backward bending then the?
Asubstitution effect outweighs the income effect
Bincome effect outweighs the substitution effect
Cincome effect and the substitution effects are equal
Dincome effect is zero
Correct answer
B. income effect outweighs the substitution effect
Explanation
The correct answer is income effect outweighs the substitution effect.