Learning Curve ch 11

as long as the wage is at least as large as the marginal benefit of another hour of leisure.

The Rational Rule for Workers tells you to work more hours

quantity of labor supplied

The _____ is fairly unresponsive to price changes when the labor supply is inelastic.

cost-benefit principle

The decision to work or not to work in the labor market is motivated by the _

unresponsive; inelastic

The quantity of labor supplied is fairly _____ to changes in wages when supply is _____.

the more people will join a specific occupation

Wages act as an important signal, directing workers like you into different occupations, which means that the higher the wage

Reflects the decisions of hairdressers.

What does the upward-sloping labor supply curve represent in the graph of the wage of a hairdresser?

Derived demand

is the demand for an input based on the demand for the stuff that input produces.

the substitution effect dominates at low wages and the income effect dominates at higher wages.

the labor supply curve is backward-bending because

the substitution effect dominates.

the labor supply curve is upward-sloping because

Yes, the marginal revenue product of an extra worker exceeds the wage.

A salon's owner used to have one hair stylist and she hired one more. The customers increased from 40 to 75 customers per week. She is paying each stylist $500 per week and charges $30 per haircut. If she adds one more hair stylist, she might get 30 extra customers per week. Should she hire a third hair stylist? Why?

Wage will increase, and more jobs will be available.

As baby boomers age, more people seek in-home elder care for their aging parents. What happens to the labor market for home-health aids?

demand; lowest

Businesses are on the _____ side, looking to hire the best workers they can find at the _____ price possible.

quantity; horizontal

Hours of work represent the _____ of labor, so they go on the _____ axis.

downward-sloping

If the income effect dominates, then the individual supply curve is _____.

upward-sloping

If the substitution effect dominates, the individual supply curve is