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Questions
Why is the supply curve of labour backward sloping? Explain with the help of a diagram.
What does a backward-sloping supply curve indicate?
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Solution
A section of the supply curve may occasionally slope backward. This implies that a higher price would be charged for a smaller quantity than for a lower price. The product's supply is OQ in Fig. when the price is OP, but it drops to OQ1 when the price increases to OP1. Consequently, beyond point T, the supply curve slopes negatively.
The labour supply, which is measured in terms of hours worked, may exhibit this kind of backward-sloping supply curve. The worker initially puts in more hours to make more money as the wage rate (price of labour) rises. He would rather work than relax. A worker may be willing to put in fewer hours at a very high wage rate in order to have more free time. The worker may have made enough money at a very high wage rate to favour leisure over labour.
