Sia
Question
Microeconomics
Posted 5 months ago
Which of the following best describes the behavior that creates a labor supply curve?
Choose 1 answer:
(A) an individual maximizing utility by choosing what goods to consume
(B) a country choosing a point on its production possibilities curve
(C) a firm choosing its output to maximize profit
(D) a firm comparing the marginal revenue product of labor to the price of labor
(E) an individual maximizing utility in choosing between labor and leisure
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Answer from Sia
Posted 5 months ago
Solution
a
Definition of Labor Supply Curve: The labor supply curve represents the relationship between the quantity of labor supplied and the wage rate. It is derived from the behavior of individuals who decide how much labor to supply based on their preferences for labor versus leisure
b
Utility Maximization: An individual maximizes utility by choosing between labor and leisure. The decision to work more hours (supply more labor) or enjoy more leisure depends on the wage rate and the individual's preferences
c
Correct Answer: The behavior that creates a labor supply curve is best described by an individual maximizing utility in choosing between labor and leisure
Answer
E. an individual maximizing utility in choosing between labor and leisure
Key Concept
Utility Maximization in Labor Supply
Explanation
The labor supply curve is derived from the choices individuals make to maximize their utility by balancing labor and leisure. This decision-making process is influenced by the wage rate and personal preferences, making option E the correct answer.
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