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ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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
Transcribed Image Text:In Okennewick, 180 people are willing to spend an hour working as pizza makers for an hourly wage of $20. For each additional $5 that the wage increases above $20, an additional 45 people are willing to spend an hour working.
**Plot the Daily Labor Supply Curve:**
For hourly wages of $20, $25, $30, $35, and $40, plot the daily labor supply curve for pizza makers on the following graph.
**Graph Description:**
- **Y-axis:** WAGE (Dollars per hour)
- **X-axis:** LABOR (Number of workers)
The graph is a blank plot intended for students to draw the supply curve. The supply curve will be upward sloping, starting at 180 workers for $20 and increasing by 45 workers for each $5 increase in wages.
**Question:**
What is one explanation for why this labor supply curve is upward sloping?
- The opportunity cost of leisure increases as wages increase.
- Labor production functions exhibit diminishing marginal returns.
- Wages have to increase to accommodate union pressure.
- Firms are willing to hire more pizza makers at a lower wage.
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