An issue considered in the presentations or books Essay

An issue considered in the presentations or books - Essay Example This paper explores the concept of supply of labor, its dynamics, and key factors. Many economic theories describe supply of labor in unique ways owing to the dynamic nature of the concept. Perhaps it is imperative to note from the onset that the total hours and real salary rate are the fundamental components of supply of labor in any given economic system. The supply of labor curve, which is the graphical representation of supply of labor, depicts the theoretical wage rates versus labor. The vertical axis of the supply of labor curve represents the theoretical wage rate while the horizontal axis represents the amount of labor that workers are willing to toil for at any given wage rate (Chagny, Döpke, Plane, and Schmidt 61). The dynamics of the supply of labor depend on the compromise between leisure and labor. This tradeoff implies that workers earn more incomes by working for more hours and vice versa. However, such workers must cut down on the number of hours they spend on leisure in order for them to earn hire by dedicating more time for labor. Although this notion necessitates a delicate balance, it confirms the fundamental trade-off between labor and leisure. It means that a rise in the rate of real wage increases the opportunity cost for leisure. This trend leads to the substitution effect in the sense that the workers will develop a tendency to supply more labor (Soest, Das, and Gong 15). As workers dedicate more hours for labor, their earnings as well as their real wage rate goes up. Subsequently, the demand for ‘normal good’ leisure increases as the workers incomes rises. It means that workers will supply less labor in order to spend more hours on their ‘normal good’ leisure activities. They will develop the tendency of spending because of their higher income and they will dedicate more time (hours) on leisure activities. This tendency is called