Sam is currently earning $150,000 per year working an 80 hour week. He has just
ID: 1124279 • Letter: S
Question
Sam is currently earning $150,000 per year working an 80 hour week. He has just refused a job offer that would increase his salary to $175,000 and require him to work 90 hours per week. What can we say about Sam’s labor supply curve?
Sam does not have a supply curve, because he turned down the job.
Sam places a very low value on leisure at his current wage rate.
Sam’s labor supply curve is upward sloping.
Sam’s labor supply curve is downward sloping.
a.Sam does not have a supply curve, because he turned down the job.
b.Sam places a very low value on leisure at his current wage rate.
c.Sam’s labor supply curve is upward sloping.
d.Sam’s labor supply curve is downward sloping.
Explanation / Answer
d> Sam’s labor supply curve is downward sloping.
Reason
Sam is offered a higher pay but he turned down that offer, this means that his labor supply curve must be downward sloping now.
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