Discussion
Assertion (A) : Compared to the individual supply curve, the aggregate supply curve is more elastic.
Reason (R) : There is the possibility of moving between being out of the labour force and being in the labour force. Choose amongst the following the correct answer.
Codes :
Answer: B
(A) is correct, but (R) is not the correct explanation of (A), as the key gives it. The aggregate supply curve of labour is more elastic than the individual's, because the movement of people into and out of the labour force adds to the response of the total supply, so the assertion is correct. The reason states a real feature of the labour market but does not give the main explanation, which is the aggregation of the different reservation wages of individuals, so the key treats it as a related fact and not the explanation. Options 2, 3 and 4 differ on that and are rejected.
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