Backward-Bending Labor Supply Curve

Steps:

• Identify substitution effect: higher wages make work more attractive than leisure, increasing hours supplied initially.
• Identify income effect: at higher earnings, preference shifts to leisure, reducing hours supplied.
• Combine effects: labor supply rises with wages up to a point, then falls, creating a bend.
• Match to curves: select the one showing initial upward slope followed by downward bend.

Why C is correct:

• C illustrates the backward-bending supply curve, where labor supply increases then decreases as wages rise, per the income-substitution balance in labor economics.

Why the others are wrong:

• A shows only upward slope, ignoring income effect's dominance at high wages.
• B shows downward slope from the start, misrepresenting initial substitution effect.
• D shows constant or flat supply, failing to capture wage response changes.

Final answer: C