What is the shape of a supply curve in a large labor market

Question

A. Upward bending Curve

B. Straight, upward-sloping line

C. Step function

D. Horizontal Line

Answer 1

The labor supply curve is generally assumed to be upward sloping. However, this depends on income and substitution effect.

Assume wages are low, supply labor curve is upward sloping. If wages are high, it is backward bending shape. Also, the shape depends on the market structure. Labor supply is usually very responsive to real wage rates,