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OK.
Questions about that, either
on substitution effect or
price changes?
OK.
So now, armed with that, let's
go onto the more interesting
case which is labor supply.
It's more interesting, because
as I'll come to in a few
minutes, we talk about labor
supply, labor is typically
going to be an inferior good.
So things are going to get a
little more interesting.
So let's talk about that.
So the question you want to ask
here is how hard do folks
decide to work?
How many hours of labor do
folks decide to provide?
As we talked about when we
talked about minimum wage,
just as we all have to decide
between consuming pizza and
consuming movies, or consuming
steak and consuming potatoes,
we also have to decide between
how much labor we're going to
provide and how much we're
going to consume.
The more labor you provide to
the market, the more you
consume, but the less
fun you get to have.
Fun, we call leisure.
The less labor you provide to
the market, the more fun you
get to have, the more leisure
you get, but the less you get
to consume, because you
have less income.
And that's the trade-off we
talked about when we talked
about the effect of
minimum wage.
Now let's come back and
get underneath that
labor supply curve.
So we talked about
the minimum wage.
We talked about the labor supply
curve which was how the
hours you provide respond to
the wage and a labor demand
curve, which was how the
hours that firms want
respond to the wage.
Now let's get underneath
the supply curve.
A minute ago, we were talking
about the demand curves and
getting underneath the demand
curve for consumers.