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Question

"The supply curve of labour is an exception to the law of supply". Justify the statement, using a diagram.

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Solution

The supply of labour is an exception to the law of supply. Initially, the supply of labour follows the law of supply, that is, with an increase in wage rate, there is an increase in supply of labour. But beyond a certain wage rate, the labour prefers to have some relaxed hours. The workers can maintain the same standard of living by working for fewer hours at higher wages rates. As a result beyond the wage rate, the supply of labour starts falling.

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