Explain the nature of demand and supply in factor market differ from goods market ? Derive the supply curve of the labour and under what circumstances it becomes backward bending?
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typical supply curve shows an increase in supply as wages rise. It slopes from left to right.
However, in labour markets, we can often witness a backward bending supply curve. This means after a certain point, higher wages can lead to a decline in labour supply. This occurs when higher wages encourage workers to work less and enjoy more leisure time.
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