The backward bending supply curve of labour indicates?

A. an abnormal supply situation
B. the law of supply
C. that labour supply and wage are directly related
D. that the elasticity of supply is uniform

Correct Answer: Option C

C. that labour supply and wage are directly related

Explanation

The reason is that there are two effects related to determining supply. The substitution effect states that a higher wage makes work more attractive than leisure. … The income effect states that a higher wage means workers can achieve a target income by working fewer hours.

Backward bending supply curve is the normal case for most workers. Most economists agree that a worker’s supply curve for labor slopes upward at lower wages and bends backward at higher wages.