Question

Do you agree or disagree with the following statement? Give reason.

The backward slopping supply curve shown as inverse relationship between supply of labour and wage rate.

Answer 1

Yes, the above statement is true. The backward bending portion of labour supply curve shows an inverse relationship between the supply of labour and the wage rate. Beyond a particular wage rate, the workers start preferring leisure to work. Accordingly, as the wage rate increases they are willing to supply less labour.