- #1
chocok
- 21
- 0
I was asked this question..
If the income effect of an increase in the wage rate that a firm pays for labor outweighs the substitution effect, then the firm's labor demand curve could be upward sloping.
I claimed this to be true and I think the firm is viewing labor as giffen and so its demand curve slopes upward. But my friend said this is false as there's no such a thing like income/substitution effect on the producer side, I am not totally convinced about that tho'...
anyone has any suggestion to the question?
If the income effect of an increase in the wage rate that a firm pays for labor outweighs the substitution effect, then the firm's labor demand curve could be upward sloping.
I claimed this to be true and I think the firm is viewing labor as giffen and so its demand curve slopes upward. But my friend said this is false as there's no such a thing like income/substitution effect on the producer side, I am not totally convinced about that tho'...
anyone has any suggestion to the question?