This blog has been created to provide an area for economics students to read about how economics impacts daily life. It is especially useful for students to understand the application of macroeconomics as communicated through the media and governmental websites.

This online resource has been set up for educational purposes.All rights are reserved by the various websites.

For further clarification, please email colin@mrmc.com.sg

OLD SYLLABUS

Brief description: In some circumstances it may be possible for the labour supply curve to become backward-bending as people become less willing to work at higher wage levels.

Detailed description: As wages increase above a certain point less work will actually be done as work is an inferior good and leisure becomes more highly valued at the margins. The income effect has gradually become opposite to the substitution effect and starts to outweigh it at a wage level of W2. This cause the supply curve to bend backwards.