If leisure is a normal good, then the income effect of a decrease in wage will:
A) decrease the number of hours worked.
B) increase the number of hours worked.
C) decrease the number of leisure hours.
D) increase the sum of leisure plus hours worked.

Question

Quizplus · Accepted Answer

If leisure is a normal good, a decrease in wage reduces income, leading individuals to work more hours to maintain their income level, thus increasing the number of hours worked.

If Leisure Is a Normal Good, Then the Income Effect