Backward bending then leisure is an inferior good

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Answer true or false and support your answer with a 1-3 sentence explanation.

a. If an individual’s labor supply curve is backward bending then leisure is an inferior good (i.e., a backward bending supply curve means downward sloping for some values of the wage).

b. An advantage of the Earned Income Tax Credit over other welfare programs is that it provides incentives for some recipients to increase their labor supply. By contrast, the AFDC program that existed prior to 1996 provided incentives for all recipients to reduce their labor supply.

Reference no: EM13898304

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